The ongoing expansion of the private rented sector has left the UK needing over 250,000 new properties per year to keep up with demand.

Summary:

• Demand continues to far outstrip supply in the UK private rented sector, with a quarter of a million new properties needed every year
• The 400,000 new homes planned by the government ‘ignore the needs of renters’
• The mismatch between supply and demand is likely to see rental growth rate increase

The UK needs more than a million new rental homes by 2021 to keep up with demand.

The government’s target to build 400,000 new affordable homes for sale over the course of the next four years is ignoring the needs of renters, research by Savills suggests.

Demand for rented housing has risen by 17,500 per month on average over the last decade. Future demand for property within the private rented sector is expected to increase to at least 260,000 per year, with the government’s plans of affordable housing barely offsetting the lack of supply.

At best, Savills’ research claims that the 400,000 government-built new homes will barely reduce the booming demand, with 220,000 properties a year still required to keep up with the ever-increasing popularity of the private rented sector.

Susan Emmett, Director of Savills Residential Research, commented: “Demand for rented homes could still rise more sharply than we have forecast. We would question whether policies can accelerate housebuilding enough to see the government’s target of 400,000 affordable homes for sale reached in the timescale set.”

The mismatch between supply and demand for rental property is likely to underpin rent rises, encouraging buyers to seriously consider investing in the private rented sector.  The overall value of deals recorded by Savills investment database increased from £2.3 billion in 2014 to £2.65 billion in 2015, highlighting the increasing popularity of investing in the private rented sector.

Source: Select Property