For those who can stomach all the tax changes and tighter regulation, the private rental sector remains an excellent investment, with new market trends research showing a strong end to 2019.
According to the latest study by Paragon, 27% of landlords saw an increase in tenant demand, while separate research from Hamptons International found the average rent had risen significantly over the past 12 months.
Despite the positive outlook, the study by Hamptons International also found the number of landlords had fallen to its lowest level in seven years.
The latest government figures show the number of households in the PRS remains static at 4.6 million – 19% of all housing occupancy – while the length of time tenants are staying in rental accommodation has increased from an average of 4.1 years to 4.4 years.
But tax and regulatory changes have been blamed for an estimated 222,500 landlords selling up since 2017. There are now 2.66 million buy-to-let investors in the UK, a fall of 8% in just two years, while the total number of privately rented homes also fell by 156,410.
The study did find that landlords who stayed were increasing their portfolios, with the average investor portfolio increasing to 1.93, the highest since 2009 – a further sign, those behind the research say, that the sector is professionalising.
The fall in landlord numbers may partly explain why, despite the government’s drive to increase home ownership, 37% of landlords who answered the Paragon survey said they expect tenant demand to grow during 2020 as rental supply drops. Just 7.3% believed tenant demand would fall.
Hampton International’s research also showed the average rent rose in January by 3.6% on the same period last year to £998 per month.
Richard Rowntree, director of mortgages at Paragon, said the findings showed there was “still growing demand for rented property”.
“We expect to see tenant demand to continue to increase in the coming years and it’s important the Private Rented Sector is adequately financed to ensure tenants have a good choice of property and rental inflation is kept under control,” Rowntree said.