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Is there any opportunity in the UK private rented sector?

21/12/2022

According to recent figures, there are around 4.4 million households in the UK private rented sector (PRS) – equating to over 11 million people. With so many people struggling to get a mortgage or raise the deposit needed to buy a property, the need for private rented property is ever-present. Here’s why some investors are focusing on this sector.

 

Shrinking supply, increased demand

Recently the PRS has seen an exodus of landlords: one recent analysis reveals that the number of residential properties available to rent through letting agents halved between March 2019 and March 2022. With landlords selling their rental properties, this has led to a shortage of available homes. The BBC reported that tenants have even been involved in bidding wars to secure a place to live. 

It is estimated that the value of the PRS sector is £1.14tn – not far off the value of the FTSE 100 which stood at £1.78tn in September. The sheer size of the market is what attracts many institutional and individual investors alike. 

 

How to invest in the UK private rented sector

There are numerous ways to invest in the private rented sector in the UK. Some investors go for bricks-and-mortar, choosing to purchase buy-to-let properties designed to be occupied by a single household. Others invest in HMOs, or invest in off-plan property

There are also less tangible ways to invest in the sector. Real Estate Investment Trusts (REITs) such as this one are one option, while institutional investment in the PRS is also becoming more popular. 

Some also choose to invest in companies that serve the private rented sector – such as property technology company IMMO which announced plans to purchase rented homes from landlords and retrofit them to improve their energy efficiency. 

The private rented sector is one that is likely to remain significant in size. With so many ways in which to invest in it, are you planning on making it part of your portfolio?

 

“Stable Rise Limited is not authorised or registered by the Financial Conduct Authority. The marketing materials are not intended to provide financial advice nor promote any individual financial products.”

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