Private Rented Sector (PRS) Value Grows to £1.4 Trillion
Over the past year, the Private Rented Sector (PRS) in England, Scotland and Wales grew by 5.8% to a value of £1.4 trillion, according to Shawbrook Bank.
The average property price increased by 1.3% in Q2, with an annual growth rate of 5.4%, up from 2.2% in June last year fuelled by increased demand from first time buyers, buyers looking to take advantage of the Stamp Duty Holiday and those looking for more space and access to green space.
There has also been a 21% increase in demand year-on-year from buy-to-let property investors, with the value of the average investment property increasing by 5.6% to £258,900.
Shawbrook also reported 67% of landlords were confident about the prospects of the property market over the course of the next year and 34% of landlords planning to expand their buy-to-let property portfolio over the next year, with the following reasons for that level of confidence:
- House price growth = 41%
- Increase in demand from tenants = 41%
- Strength of the UK economy = 33%
- Increase in rental returns = 26%
Demand for Private Rental Accommodation Increases
Demand for rental accommodation has reached a five year high (NRLA), increasing by 8% in Q2 2021 compared to Q1 2021, after COVID restrictions had eased and with the UK economy bouncing back, with 4.8% growth in Q2.
An increasing number of tenants are renting for longer, with 49% of tenants expecting to live in rented accommodation for the rest of their life. Whilst this is partly due to affordability, renting is no longer seen negatively, as it provides the flexibility and freedom to move areas, or, move into a more suitable property if their circumstances change, without the hassle of selling a home. Renting can also provide a better quality of accommodation in better areas than a tenant could afford as a home owner. Read more about “Generation Rent”.
Locations for the Best Returns
The buy-to-let property investors who are looking to build up their portfolio over the next year should be looking at the areas with the highest rental yields and capital appreciation:
- North West (e.g. Manchester, Liverpool) = 5.5% rental yield / 28% price growth est. in the 5-years to 2025
- Yorkshire & the Humber (e.g. Leeds, Sheffield) = 5.4% rental yield / 28% price growth est. in the 5-years to 2025
- Scotland = 5.8% rental yield / 24.4% price growth est. in the 5-years to 2025
- London = 3.9% rental yield / 12.4% price growth est. in the 5-years to 2025
- UK average = 4.3% rental yield / 21.5% price growth est. in the 5-years to 2025
Regency Invest offer a range of buy-to-let property investment opportunities in the North West of England, highlighted by Shawbrook Bank as to where property investors should be looking for their next buy-to-let investment:
Speak with one our advisors today by completing our quick and easy 60-second questionnaire and we will be in contact with a variety of options that meet your investment criteria.
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