The UK has been ranking fourth in terms of the total number of private properties for rent, a sign demonstrating the continued growth of the rental market. Of the 29.5 million homes on the property market, 30% are believed to be available to rent, which means the UK’s buy-to-let stock stands at over 8.7 million.
According to the data released by Octane Capital, the UK ranks behind the USA, Germany and Japan in terms of the number of rental properties available. The USA lead the table with 34% of the nation’s 139.7 million properties available for rent, with Germany coming in second with 20 million private rented homes. Japan is also above Britain with 17.7 million rented homes whilst France completes the top five with 8.3 million.
Britain’s position in the top five rental markets confirms its status as one of the hottest locations for buy-to-let landlords. 2021 was a record year for house prices, and whilst analysts have predicted a downturn in 2022, the property market has continued its unstoppable march skywards.
The removal of the stamp duty holiday, coupled with an easing of pent-up demand, is still predicted to cause a flattening of price rises in the latter part of the year, but this is a market that has defied the skeptics ever since the beginning of the pandemic. Despite growing economic headwinds, the lack of supply in the market continues to support property prices.
Inevitably, however, the market is pricing many people out of buying a home. Those who might otherwise have been looking to buy are holding their fire as they wait for the market to calm down. As inflation hits record highs and the global economy becoming more volatile each week, the number of people who can afford to buy is dwindling.
Ultimately, this is having a ripple effect on the UK rental market. Demand is booming, and, despite recent changes to the rules surrounding mortgage tax relief, the buy-to-let market has rarely offered better prospects. Rental yields are rising, giving landlords the opportunity for a steady and growing income stream.
The market is also evolving. Increasingly advanced digital technology and shifting working patterns during the pandemic have caused people look beyond the capital to elsewhere. Rapidly developing local economies in the North are also attracting waves of young professionals into the rental market in places like Manchester.
In addition, with many people being priced out of buying a house, the UK rental market benefits from a flood of affluent tenants with high incomes and reasonable levels of savings. It is driving value in the higher end of the rental market, with people showing a willingness to seek out better properties in the short term than they otherwise could buy.
However, there are still some spots on the landscape. Rising property prices are tempting some landlords to cash in to take profits and invest elsewhere. It continues to constrict supply in rental property and support increasing rental prices.
Consequently, for landlords, the prospect is extremely positive. Whether looking to sell or benefit from rising rental income, this is a lucrative market.
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