Stats first :
Population growth increasing by 3.7milion every 10 years
New houses built approximately 120,000 per year
Demand increases and supply does not -then prices increase.
9 million people in the private rented sector
1.3 million of these with children
Average house prices almost 8 times peoples earnings .
89% of landlords are private individuals of which most own less than 10 units.
The private rented sector houses more people than in social housing
Institutional investment in the private sector uk 1%
Institutional investment in the private sector Holland 47%
The government aims to bring more properties available for social housing to the market by encouraging institutional investment rather than small scale buy to let investment.
However this strategy has failed to bring significant investment by the institutions to build properties for rent.
Institutions can achieve a higher return by selling property rather than building to rent – and more quickly than by rental .
Ideally the government would like to see a boom in investment in the private rented sector by the institutions to solve the long term housing shortage, however this is a painfully slow process and so far has not solved the housing crisis. In fact there has been a raft of legislation introduced to stifle buy to let purchasers
As the private rented sector grows we will see assets being valued on the basis of their income rather than on the value based upon being vacant, this will lead to longer term tenancies and a move towards the European model.
Which brings us the Brexit discussions over the next two years
The size of small scale landlord investment indicates that it will continue to dominate the market in the next 2 years.
A massive change in strategy by the government will be necessary to invoke institutional investment this will not happen in the next 2 years and government will need to rethink their attack on buy to let in the short and medium term to fulfil the shortage in housing supply.
Landlords who stay with their investments and adopt will thrive in the long term.