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UK build-to-rent market grows while individual landlords wane

Build to rent

A new multi-housing survey from real estate firm Knight Frank has revealed that an additional 560k households will be renting by 2023.

£75 billion of investment will be committed to the professionally managed private rented sector in the UK by 2025 as the sector continues to grow due to demand.

The research shows that the rental market is aging as obtaining a mortgage deposit remains a hurdle for many. In-line with this demand comes a rise in build-to rent with some 29,416 professionally managed units completed with 110,092 under construction or in planning.

It is expected that the provision of social/affordable housing will increase over the next five years as a response to looser lending rules for councils, new Government funding for social housing and increased activity of registered providers in the land market in recent years.

See more about the Government’s lift on the lending cap for council homes here

What the experts say

Head of residential investment agency at Knight Frank, Nick Pleydell-Bouverie said: “We are seeing a significant number of individual private buy to let landlords exiting the market as the Government’s buy to let tax changes start to bite. Large scale professional PRS landlords are well placed to absorb this, as well as satisfying some of the structural shortfall in our housing supply.

“A principal constraint on the delivery of housing is the estimated rate of sales for developers. The institutional PRS market can significantly accelerate this through near immediate absorption. It is crucial that the UK Government resists further legislation and taxation and enables the PRS market to significantly contribute towards the UK housing challenge”.

According to Tim Hyatt, head of residential lettings at Knight Frank landlords could be squeezed further by more change. He said: “Once again, affordability has emerged as a key reason for people choosing to rent in order to live in an area where they would not be able to buy.

“However, average rents in Britain rose 1% in the 12 months to December as more landlords leave the sector and levels of stock decline. The tenant fee ban, which comes in into effect in June this year, may also result in some landlords increasing rents to offset any extra costs”.

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