The proportion of households living in the Private Rented Sector (PRS) will rise to 24% by 2021, according to new Knight Frank Research.
Knight Frank’s latest PRS research, The Multihousing Report, released this week, also indicates that institutional investment in the PRS sector is set to accelerate over the next five years to £70 billion.
In addition, the report reveals the findings from Knight Frank’s Tenant Survey, reflecting the views of more than 10,000 people living in the PRS – making it one of the largest surveys of its kind ever conducted. It shows that 68% of renters across the UK expect to be living in the rented sector in three years’ time.
Analysis of the key drivers in the rental sector, coupled with the outlook for household growth, indicates that 5.79 million households will be in the PRS by the end of 2021, Knight Frank forecasts.
Young professionals (aged 25-34) make up the largest proportion of households living in the PRS; taking advantage of the increased flexibility of a tenure which allows moving between locations without any of the costs associated with buying or selling a property.
Recent policy changes, additional stamp duty on buy-to-let investments and the curbing of mortgage interest rate reliefs – marks a change for the PRS, but also creates potential opportunity for large-scale operators in the rental sector.
Large-scale institutional investment in Build-to-Rent or Multihousing, which only emerged in force in the UK in recent years, is now worth an estimated £25 billion. Informed by a survey of the key investors and operators in the market, Knight Frank estimates that by 2022, this market will be worth £70bn.
Analysis of more than 1.5 million data points highlighted the key priorities for tenants across the country.
The results show that 68% of renters still expect to be living in the rental sector in three years’ time. The key concern for tenants when looking at rental property is affordability, re-affirming the findings of the two previous Tenant Surveys. Location, the second biggest priority is seen as a much larger concern than the size of the property itself.
Knight Frank spoke to 26 major investors and operators in the UK’s burgeoning Multihousing sector, to gain insight into how the market is set to develop. Currently, investment is weighted towards the Capital, with 65% of investment in London, compared to 35% in the regions. Furthermore, 15% of all residential units currently under construction in London are Multihousing, compared to 4% across England and Wales.