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UK's private rental sector set to grow by 2025

Published: 23rd May 2019

UK's private rental sector set to grow by 2025

Even though buy-to-let property investors could easily be forgiven for thinking that the government has some kind of vendetta against them, the fact still remains that the government does still need the private rental sector and this need is likely to continue to grow until at least the year 2025.

This means that property investors who keep faith with the buy-to-let sector over the coming years could see their faith rewarded with solid investment returns. Here are three reasons why.

The supply of rental properties is tightening

Over recent years, government policy and practice seems to have focused very much on getting first-time buyers on the housing ladder and their strategy for achieving this aim has combined support for first-time buyers (such as a reduction in Stamp Duty) with an increased financial burden on property investors (such as increased Stamp Duty and the elimination of Mortgage Tax Relief).

As a result, many of the UK’s famous “accidental landlords” have sold up, which, in theory, should have helped first-time buyers without damaging renters, since the reduction in the supply of rental property should have been balanced by a reduction in the demand for it as former renters became homeowners. Unfortunately, this is not what has happened in practice, quite the opposite in fact.

Demand for rental properties is growing

There are basically two reasons why people rent, one is because they want to and the other is because they need to. Young adults are an obvious example of people who often prefer to rent, even if they can afford to buy. Renting offers flexibility, which is particularly valuable to people in the early stages of their career. Interestingly, however, there is a growing trend of older people renting, especially in their “post-child” years, possibly because it can be a very astute move from the point of view of minimizing the Inheritance Tax burden on an estate.

There are also people who, for whatever reason, are not in a position to buy, at least not at this time, this group includes not just lower-income workers, but people who do not have a solid credit history in the UK and hence are unlikely to be accepted for financing. To this group might be added people who might, in theory, be able to buy but would prefer to wait to see what Brexit will bring before taking a final decision on whether they can realistically manage to commit to a mortgage.

The private sector is better able to respond to social changes

A lot has changed in the UK (and the world) over the last few decades and the pace of change is very fast, so fast, in fact, that the wheels of government (which are notorious for moving slowly) are sometimes unable to keep up with it.

Private investors, however, are accountable only to themselves (rather than to committees and, ultimately, to voters) and hence can move as quickly as their inclination and finances allow. This makes it possible for them to invest in under-served markets, including niches which might be too small to merit government attention.

If you would like to discuss any property investment opportunities or are looking to sell your investment, feel free to call us on 0161 464 7530 or email us on enquiries@pureinvestor.co.uk 

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Pure Investor - Property Investment