High house prices and an exodus of buy-to-let landlords could lead to a ‘US-style rental market’ dominated by corporations, experts say.
According to data from Rightmove, the typical asking price for a home increased by £2,974 in September to reach £370,759.
With high prices pushing the number of first-time buyers out of the market, the volume of people choosing to rent is expected to increase. However, with buy-to-let landlords selling up amid tighter regulation and unfavourable tax changes, corporations are expected to step in and ‘fill the gap’.
Aaron Milburn, UK managing director for Pepper Advantage, said: “Rising home prices will exacerbate a fundamental shift taking place in the UK housing market. With buying increasingly out of reach for many, more people are looking to rent, yet a growing number of buy-to-let landlords are exiting the market as mortgage holders continue to be refinanced onto higher rates. The pressure on renters in many areas is becoming acute.
“Looking further ahead, it’s possible that the widening gap left by private, ‘mum and dad’ landlords will be filled by corporations, which could see the UK moving toward a more US-style rental market.”
Tom Brown, managing director, real estate at Ingenious, said: “There’s clearly a significant and notable shortage of housing inventory across various price brackets and locations. Consequently, any decline in homeowner sales is likely counterbalanced by increased demand from renters and investors.
“In the real estate sector, we’re seeing significant investment capital for assets for long-term rental. On account of their scale and buying power, these typically institutional investors face fewer disruptions than owner occupiers or small-scale buy-to-let investors.”
Daniel Austin, CEO and co-founder of ASK Partners, said the sustained rise in rent values has positioned real estate as reasonably valued in comparison to gilts and shows growth potential.
“In the realm of commercial real estate, we have seen values hit the bottom and confidence return. The market has picked up with opportunistic acquisitions of prime properties in prime locations,” he added.
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