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Buy To Let end-of-year report: rents and values up but confidence weak

A cocktail of tax reform and tighter regulation is slowing growth across the private rental sector, despite its value hitting a new high according to a new report.

The value of the sector in Britain currently stands at nearly £1.4 trillion, a rise of 6.4 per cent or £82.6 billion in the last year alone. 

Rising house prices have been the key driver in this increase, with the average rental property climbing in value by 4.2 per cent in the last year according to the latest edition of Kent Reliance’s Buy to Let Britain report, out today.

The total number of households in rented accommodation is growing much more slowly. 

There are nearly 5.6m households across Great Britain in the private rented sector, just 2.2 per cent more than a year ago. This is less than a third of the rate of increase seen in 2014. 

Slower growth reflects increasingly fragile confidence in the sector. 

Some 41 per cent of landlords are confident about the prospects for their portfolios - this is a slight recovery from the record low reached in the second quarter of 2017, but remains far lower than in recent years. 

Confidence has been hit by tax reform reducing the amount of mortgage interest that can be offset against tax, rising costs, and new mortgage rules that have tightened criteria.

Tenant demand is growing more slowly too. Just five per cent more landlords reported rising tenant demand than those reporting it fall, the lowest balance in at least five years.

This has been reflected in easing in rental inflation. 

Average rents per property now stand at £895 per month across Great Britain. Although this is another new high, the typical rent increased by 1.5 per cent annually, down from 2.4 per cent a year ago with sluggish growth in London weighing on the national average. 

Rents are likely to continue to climb as 29 per cent of landlords expect to increase rents over the next six months. 

  • Mark Wilson

    This reads to me to be an optimistic forecast of what is to expected in 2018.

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