Conveyancers will continue to see an increase in the volume of Buy-to-Let clients, as the private rental sector (PRS) within Great Britain is reportedly estimated to reach £1 trillion next year.
The Buy to let Britain report released by building society, Kent Reliance, says the value of the PRS has now reached £930.7 billion — an increase of £109.5 billion within the last year, which is a surge of 13.3%.
Though house price growth is settling, the report suggests the PRS will hit the £1 trillion mark by quarter two of 2015.
Since the recorded dip in 2009, the sector has gained around £302.5 billion according to the recent report. Also, following the peak back in 2007, the PRS has since risen by more than a quarter of a trillion pounds.
The total assets of landlords within Great Britain are said to be three and a half times their worth than in 2001, when the figure reached £262.1 billion. The number of residential properties within the PRS has also increased since this time, by around 2 million homes — a rise of 71.4%.
OneSavings Bank trades within the Buy to Let market under the Kent Reliance brand. The bank’s Chief Executive Andy Goulding says, "Private renting isn’t a flash in the pan, and 80 per cent of new households since 2001 have been accounted for in rental properties."
With the amount of private rental properties within Great Britain now reaching over 4.6 million, this stable growth is said to be down to demand from prospective tenants. This is certainly a positive outlook for conveyancing professionals, as the Buy to Let market will seemingly continue to expand at a great pace.
"Landlords have benefited from the recovery in house prices since 2009, which has pushed their wealth to within touching distance of £1 trillion. But as the sector’s value marches upwards, the main impetus has come from the growth in the number of households as demand from tenants continues to climb." says Goulding.
Experts have been speculating the reasoning behind such a strong demand to rent. This could be due to both individuals and families wanting to live more flexibly, allowing for easier transfer between homes due to lifestyle alterations and moving workplaces.
Other factors could include the seemingly greater amount of debt amongst young people, the combination of dip in wages with the increase in property prices, as well as the overall difficulty in acquiring a mortgage.
Goulding comments, "While for many it is a lifestyle choice, the ongoing squeeze on wages, rising house prices, not to mention difficulty in obtaining sufficient mortgage finance is accentuating this shift in tenure from owner occupation to long term renting. In many ways, Britain is becoming a more normal nation, much more like its continental neighbours as a result."
Kent Reliance have stated that London accounts for 41% of the total PRS value, the largest proportion at £377 billion.
The second most valuable region within the rental sector is currently said to be the South East, securing 15% of the total at £137 billion.
Within the past year alone until June, landlords reportedly earned £44.8 billion, which is up by £2.3 billion (5.5%) compared to the previous year. This signifies a 6-year high in annual gross return and landlords on average are seeing a return of £27,475 per property.
Goulding concludes by adding, "Buy-to-let lending has rebounded to match the growing – and increasingly diverse – needs of landlords. It is imperative that it continues to do so. There are some clouds on the horizon – such as the European Mortgage Credit Directive, which will provide welcome protection for consumers entering the market. But the future looks positive for the sector as "Generation Let", Britain’s 1.4 million landlords, continues to grow and professionalise."
