93% of UK landlords own just a single rental property


According to an analysis of 65000 rental properties by Countrywide, out of all the landlords in the UK, 93% own only one rental property and together they make up 81% of the private rental market. This comes about despite increased investment in the sector by various institutions. This trend is quite consistent in all the countries making up the UK with between 78-83% percent of property in the rental market being owned by landlords with only one property each.
While homeownership took a beating during the recession, the private rental property market grew stronger. The government set aside an extra £1 billion in the 2013 budget to go towards its Build-to-rent fund and this was supposed to add 6500 new homes to the private rental market. Despite all this, institutional landlords still make up a very small portion of the sector. Only 0.7% of landlords in the UK own more than 5 properties and together this only accounts for 6.7% of the private rental market.
Growth in the private rental market has been sluggish over the past 10 years but a combination of low-interest rates and good returns are now attracting more investors to the sector. It’s possible that as the government invests more in the sector, people will take the opportunity to increase the sizes of their portfolios. Both landlords and tenants could gain from the potential of economies of scale.
Up until the end of March 2014, rents were increasing by an average of 3% each month. On average, the rents all over the country were either increasing with or just below the inflation level and demand shifted more towards the sale market. In London, there was a rise in demand from both locals and from abroad due to improving job creation figures and this resulted in the capital experiencing the largest average monthly rent growth in England. Due to the improved job creation numbers, the population in the capital rose up to 8.4 million and although rental growth in Central London is currently sluggish, the affordable outer boroughs are currently driving the rents up.
In the rest of the UK, average monthly rents have been moving with wages and inflation and this has resulted in this has resulted in some tenants paying less rent. In some parts of the country, landlords have had their benefits reduced by the rising house prices which have not been moving proportionally to increase in tenant numbers.
Nick Dunning from Countrywide has stated that the government’s Build to Rent scheme, which was supposed to increase the number of institutional investors in the sector, has actually played a much smaller role in helping this sector grow and most of the growth witnessed since 2000 came from landlords expanding their portfolios or investors buying their first property and this is why landlords with small portfolios are so important to the sector at the moment. He also stated that the expectation is that the number of renters is set to increase due to the fact that homeowners are now buying later in life and the number of social renters reduces.

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