Private Rental Sector Shows Slow Decline

by | Wednesday 13th Sep 2023 | Mortgage News

The Bank of England has recently released a report shedding light on the current state of the private rental sector in the UK. This measurement of landlord property transactions from the Bank of England reveals that the sector has been experiencing a gradual contraction over the past two years, although at a slower rate than some other indicators have suggested. What could this mean for UK landlords?

Shrinking Private Rental Sector

The report’s findings have significant implications for both landlords and tenants in the UK, as well as potential homebuyers. It highlights the challenges faced by landlords and their impact on the overall housing market. According to the Bank of England’s report, the private rental sector in the UK has been steadily shrinking since at least 2021. This trend has been less rapid than previously thought, offering some reassurance to those concerned about the impact of a declining rental sector.

Indicators of Stress Among Landlords

The sales of privately rented properties are not only indicators of the financial stress faced by landlords but can also trigger broader consequences in the housing market. For instance, the sale of such properties can lead to increased rental costs for tenants and potentially depress house prices. The report notes that it is crucial to distinguish between property movements within the private rental sector and those transitioning to owner-occupier status. Various existing measures offer different definitions of what constitutes inflows and outflows from the private rent sector. Cumulatively, these measurements suggest that the sales of private rental properties in 2022 are unlikely to have exceeded 100,000.

Impact On the Rental Market

The report’s findings have a lot of implications for the UK rental market. As the private rental sector gradually contracts, tenants may face reduced options and potentially higher rental costs. Fewer properties available for rent could result in increased competition among tenants, leading to bidding wars for desirable rentals. Additionally, for aspiring homeowners, the reduction in private rental properties might lead to increased demand for homes for sale, potentially driving up property prices in certain areas. This could present challenges for first-time buyers trying to enter the housing market.

Challenges and Opportunities For Landlords

Landlords in the private sector should take note of the report’s findings. The data indicates that the sector is under pressure, which could affect landlords’ profitability. Those considering selling their properties should carefully evaluate market conditions and assess the potential impact on tenants. However, this situation also presents opportunities for landlords who remain committed to the private sector. With fewer properties available for rent, those who maintain their investments may find less competition and potentially higher rental yields.

Speak To a Specialist Buy-To-Let Mortgage Broker For Help and Guidance

The Bank of England’s report on the UK private rental sector paints a clear picture of its current state. While the sector has been slowly shrinking for the past two years, the decline has been less dramatic than some indicators have suggested although it is still on the decline. This information provided by the Bank of England offers a valuable perspective for landlords, tenants, and potential homebuyers, allowing them to make informed decisions in an evolving housing market.

As the housing landscape continues to shift, it is essential to monitor these trends and adapt to the changing dynamics of the UK’s private rental sector. The best way to do this is by being in regular contact with a specialist experienced mortgage broker. Whether you are a landlord looking to keep your investment profitable or a first-time buyer looking to potentially purchase an ex-rental property. We are here to help. Call or email our friendly team of advisors today for a free initial mortgage consultation. 

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