More investment needed in the property market

More investment needed in the property market as rental homes fall in number

Posted on Posted in Investment

A greater level of investment could be needed to help bolster an already strong private rented sector across the UK. Despite continued high levels of demand from tenants across all the UK’s major cities, new reports show a decline in available stock over the last few years.

This could open the door for all new ways of investing in the rental market, with the sector likely to benefit from further activity in the Build to Rent branch of property, where stock is built specifically with the rental sector in mind. Build to Rent gives the private market the chance to build on a larger scale than other property types, bringing more new homes to market in a shorter space of time than we have seen in the past.

The drop in available rental stock will come as something of a surprise, given how well the sector has performed for investors over the past decade or so, as well as how many people now choose to rent rather than owning their own property.

But according to a study carried out by Home.co.uk, in the period between July 2011 and June 2017, there has been a drop of some 11.6 per cent in available rental homes.

Some areas of the UK are worse hit than others, with the report stating that in Scotland, there has been a fall amounting to some 34.7 per cent, but the fact that there has been such a substantial drop in stock across the nation on average will be cause for concern for the rented sector.

Wales also saw a marked drop in the number of properties being available for rent, and while there were smaller declines across England, the fact remains that seven of the 11 regions across the UK did experience falling stock levels over the last few years.

The good news for the rented sector and investors is that the best performing and fastest growing areas have seen smaller falls than in other places. Successful pushes for the rental market in the likes of Leeds, Manchester and Liverpool have meant that Yorkshire and the north-west have seen among the smallest falls in stock levels, with declines of just 5.5 per cent and 8.9 per cent in these regions respectively.

Home.co.uk director Doug Shephard, said: “A barrage of red tape and taxation, at both local and national Government levels, has meant that the supply of rental properties has fallen behind demand in most regions thereby driving up rents.”

The good news is that even though there have been falls in supply over the last few years, the fact that demand remains as high as it is at present, coupled with the fact the government is becoming more likely to back the Build to Rent sector in coming years, means that investors still have reasons to be positive. And in the coming decades, it’s only likely that this trend will reverse, and we will see more rental homes than ever before becoming available in the private sector.

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