A new report from Savills and Rightmove shows the recent strength of the private rented sector. The up-market agency and the property website have teamed up to produce a comprehensive review of this important part of the British property market.
The findings confirm what people have been suspecting for some time – that private landlords have seen something of a boom in the last few years. Property insurance clients will note that the total value of properties in the private rented sector is £840 billion, an increase of 42% in the past 5 years. These properties commanded a total rental income of £48 billion in 2011. The authors of the report expect this figure to rise to £70billion in 2016.
Savills and Rightmove say that the biggest challenge is supplying the rising demand from potential tenants. Supply shortage is therefore driving growth in asking rents. The rises of around 5% across Britain in 2011 mean that affordability is becoming an issue for some prospective tenants in some areas. At one end of the scale, the report cites a rent of £48,230 pa for a two bedroom property in Kensington and Chelsea and at the other end of the scale £4,560 for a two bed in Blaenau, Gwent.
Average gross yields vary from 5.3% in the South West to 6.3% in the North West, but there are significant variations within regions.
The report suggests that renting is very much here to stay and is not just a short term fix for people who need a tenancy for a year or two while they save for a deposit on their own home. For full details go to www.savills.co.uk
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