93% of UK landlords own just a single rental property

Coutnrywide Residential Lettings

Tuesday, April 8, 2014

 

The vast majority of the UK’s private rented housing stock is owned by landlords with just a single property. Despite significant institutional investment in the sector, over 93% of landlords in the UK have a single rental property and together they account for 81% of privately rented stock, according to analysis of Countrywide Residential Lettings database of over 65,000 rental properties.

Data from the UK’s largest lettings agency also shows that there is very little variation throughout England, Scotland and Wales, with single property landlords accounting for between 78% and 83% of all private rented properties.

The recession saw the private rented sector grow strongly, primarily at the expense of homeownership. While the government extended its Build to Rent fund to £1 billion in the 2013 Budget, which is anticipated to add 6,500 homes to the private rented sector, equating to 0.2% of total stock, large institutional landlords remain small players in the sector. Just 0.7% of landlords have portfolios of more than five properties, providing just 6.7% of privately rented housing stock in the UK.

Over the past 10 years growth in the private rented sector has been on a relatively piecemeal basis. However, new landlords have entered the sector driven by healthy yields, which look attractive in the context of low interest rates. Government investment into the sector may result in the size of portfolios expanding, and the introduction of new innovation and the potential for economies of scale to be made, will benefit both the tenant and the landlord.

Composition Of The UK Provate Rented Sector

Average monthly rents in the UK increased 3% to the end of March 2014. Throughout much of the country, average monthly rents increased at, or below the rate of inflation, as demand was transferred into the sale market. In England, London posted the largest annual growth in average monthly rents as strong job creation figures boosted demand both domestically and from abroad.

Strong job creation figures saw the capital’s population reach 8.4 million in 2013, just below the 8.6 million it reached in 1939. Rents have been driven up by the more affordable Outer Boroughs of London, as rental growth in Central London slowed.

Across the rest of the UK, average monthly rents have closely tracked wages and inflation meaning that some tenants have seen their rents fall in real terms. With house price growth outstripping the growth in rents, landlords across some parts of the country have seen their yields eroded.

Table A: Variations in rents, yields and arrears data in England, Scotland and Wales

Region

Q1 2014 Average Rent

Q4 2013 Average Rent

 Q1 2013 Average Rent

Arrears >30 days (% rent roll £)

March 2014 Rent year-on-year increase / decrease

Greater London

£1,156

£1,146

£1,107

7.8%

4.4%

Central London

£2,509

£2,447

£2,387

7.2%

5.1%

East of England

£832

£829

£814

6.4%

2.2%

South East

£1,080

£1,087

£1,054

4.8%

2.5%

South West

£752

£755

£745

4.6%

0.9%

Midlands

£637

£644

£636

7.0%

0.2%

North

£614

£619

£603

7.3%

1.8%

Scotland

£631

£633

£580

6.7%

8.8%

Wales

£638

£638

£618

5.9%

3.2%

Total

£863

£860

£835

6.4%

3.0%

Commenting on the findings, Nick Dunning, Group Commercial Director, Countrywide plc said:

“Landlords with small portfolios play a hugely important role in the UK’s private rented sector. While the government is helping to support this growing sector through schemes such as Build to Rent, which is anticipated to increase the number of larger institutional landlords, the vast majority of landlords own just a single property. The doubling in size of the private rented sector between 2000 and 2013 was almost entirely driven by landlords either expanding their portfolios or buying investment property for the first time. So far, larger Build to Rent schemes have played a limited role in the growth of the sector.

“The number of privately rented households is projected to continue growing as the number of homeowners and social renters continues to shrink. Would be homeowners are buying later in life and households, which in the past might have been housed in the social rented sector, now live in private rented accommodation. Build to Rent schemes will undoubtedly play an increasing role in meeting some of this new demand. However, while Government backing for institutional investment in the private rented sector will increase the number of landlords with large portfolios, for the foreseeable future the UK will remain a nation of landlords with small portfolios.”

-Ends-

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