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PRS Value Climbs to £1.4trn But Growth is Slowing

A cocktail of tax reform and tighter regulation for landlords is slowing the growth of the Private Rental Sector (PRS), despite its value hitting a new high, according to the seventh edition of Kent Reliance’s ‘Buy to Let Britain’ report.

The value of the PRS in Great Britain currently stands at nearly £1.4trn, a rise of 6.4% or £82.6bn in the past 12 months. Rising house prices have been the key driver in this increase, with the average rental property climbing in value by 4.2% in the last year.  

The total number of households in rented accommodation is growing much more slowly however. There are nearly 5.6m households across Great Britain in the private rented sector, just 2.2% more than a year ago. This is less than a third of the rate of increase seen in 2014.  

According to the report, this slower growth reflects landlords’ ‘fragile confidence in the sector’. The firm says that just 41% of landlords are currently confident about the prospects for their portfolios. While this is a slight recovery from the record low reached in the second quarter of 2017, it remains far lower than in recent years. Confidence has been hit by tax reform reducing the amount of mortgage interest that can be offset against tax, rising costs, and new mortgage rules that have tightened criteria.

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