Sector continues to grow and is providing the vital rental market backbone
The UK has faced a persistent shortage of new housing, adding to soaring house-price growth, with many people being forced to rent for longer.
In more recent years the government has tried its hardest to dampen investment into the private rental sector, with a string of legislative changes around tax relief, Stamp Duty Land Tax and tenant fees, reducing the profitability of some buy-to-let investments.
Level of capital appreciation
The COVID-19 pandemic has also proved problematic for landlords who have suffered lengthy void periods due to factors such as the tenant eviction ban and a reduction in rental demand across major UK cities, in particular.
But despite all of this, the sector continues to grow and is providing the vital rental market backbone that so many are reliant on. At the same time, the nation’s landlords have benefited from a considerable level of capital appreciation on their buy-to-let investment and the value of the sector as a whole has increased substantially.
Nation’s buy-to-let properties
The UK’s buy-to-let sector has grown substantially in value over the last five years, increasing by almost £240 billion, new research reveals. There are an estimated 5.5 million private rental properties within the UK rental sector and based on current market values, the estimated total value of the nation’s buy-to-let properties is £1.7 trillion.
With just over 1 million private rental homes, the London market accounts for 19% of the UK’s total buy-to-let properties. With London also home to the highest property values, it sits top where the total worth of the buy-to-let sector is concerned at over £500 billion in value.
Privately rented homes
The South East is home to the next most valuable buy-to-let market at £247 billion, with buy-to-let values also exceeding £100 billion in the East of England (£168 billion), the South West (£156 billion), the North West (£110 billion) and the West Midlands (£104 billion).
While the level of privately rented homes has remained largely flat across the UK over the last five years, the total value of the buy-to-let sector has seen a significant boost due to strong house price growth. The UK’s buy-to-let market is estimated to have climbed by £239 billion since 2017, a 16.8% increase.
Uplift in buy-to-let market value
Even with London house price growth lagging behind the rest of the UK, the capital has still enjoyed the largest uplift in buy-to-let market value with a £57 billion jump, followed by the South West (£34 billion) and the East of England (£27 billion).
Privately rented properties account for around a third of all homes in the UK and are clearly crucial in providing accommodation for many thousands of tenants, many having been priced out of homeownership due to high prices.
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