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Rental sector “to be worth £1tn” by next year

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06/11/2014
The value of property owned by landlords in Great Britain is set to break the £1 trillion barrier next year, according to a report from Kent Reliance.

The building society’s Buy-to-let Britain report calculates the total value of property in the private rented sector (PRS) in Great Britain has now reached £930.7bn, climbing by £109.5bn in the past year alone – a rise of 13.3 per cent.

From its recent trough in 2009, the sector has gained £302.5bn. In fact, the financial crisis had little impact on the sector. Even since the 2007 peak of the property boom, it has risen by more than quarter of a trillion pounds.

The value of landlords’ assets now more than three-and-a-half times its level at the start of 2001 (£262.1bn).

Resurgent property prices have been a key driver in the increasing value of the private rented sector but long-term growth has been underpinned by strong demand from tenants.

Since 2001, the PRS has expanded by nearly two million households – increasing by 71.4 per cent since the start of 2001.

There are now more than 4.6m households in the British PRS.

Unprecedented tenant demand has emerged from a combination of individuals and families choosing to be flexible, ongoing net immigration and falling real wages.

Other factors include greater indebtedness among younger households, rising property prices, and difficulty in securing mortgage finance is creating unprecedented tenant demand.

London currently accounts for 41 per cent of the sector’s value at £377bn while the South East is the next biggest component with its value of £137bn (15 per cent).

Rents continue to rise as landlords earned £44.8bn in the twelve months to June, equivalent to nearly half the UK’s total annual household expenditure on food. This is up by £2.3bn (5.5 per cent) against last year.

Andy Golding, chief executive of OneSavings Bank, which trades under the Kent Reliance and InterBay brands in buy-to-let, said: “There are some clouds on the horizon – such as the European Mortgage Credit Directive, which will provide welcome protection for consumers entering the market. But the future looks positive for the sector as “Generation Let”, Britain’s 1.4 million landlords, continues to grow and professionalise.”

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