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Evaluating the perceived and actual value attached to the private rented sector
The private rented sector is playing an increasingly vital role in the wider UK housing market but its value continues to come under scrutiny from different angles.
Sustained negativity has been common however, this sector has repeatedly proven how resilient it is and how profitable it can be for landlords who approach it in the right way.
Over the past few years, the housing market has had an interesting journey following a brief period where it was stopped by the initial lockdown. This resulted in house price increases following the ‘reopening’ of the market and the additional motivation generated by the stamp duty holiday.
But how has this impacted the perceived and actual value of the private rented sector?
Sirius Property Finance recently reported that the estimated total value of the private rental sector in England has seen a 30% rise since 2019 to now sit at a staggering £1.536 trillion. This analysis looked at the level of stock, the current market value of this stock, the average rental yield available across England and how it has changed since 2019. As a result, it found that the overall size of the PRS has grown by 2.4% across England since 2019, with 4.876m properties helping to house the nation’s tenants.
It’s noteworthy to compare this on a regional basis. At an estimated £575.7bn, London remains home to, by far, the most valuable PRS where total stock value is concerned. However, compared to the pre-pandemic market, the capital has seen the smallest increase in this total value at 16%. The South West is suggested to have driven PRS market performance in terms of the increase in total value, up 41% when compared to 2019. The total value of PRS stock has also increased by more than 30% across the North West (+39%), South East (+37%) and West Midlands (+31%).
Additional data from the latest BVA BDRC Landlord Panel research for Q4 2022 appears to back up the buy-to-let positivity being exhibited in the South West, with landlords in this region suggesting that they are twice as likely to buy as they are to sell.
What landlords do with any equity gains accumulated over the past three years and beyond – in terms of their purchase, remortgage or selling intentions will be interesting to follow. What we do know is that strong tenant demand and a lack of quality rental stock will continue to drive the BTL market forward and ensure that opportunities will present themselves to landlords in many different sizes, shapes and forms throughout 2023.
FOR INTERMEDIARIES ONLY
