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UK’s private rented property sector in demand

The National Landlords Association's (NLA) annual National Conference in Manchester heard that it is an exciting time for the private rented sector as demand grows.
Keynote speaker Terrie Alafat, director of housing growth and affordable housing at Communities and Local Government (CLG), told the conference that housing is definitely at the top of the government's agenda and the private rented sector is in the middle of all of that.

‘We know that demand is continuing to grow and the sector has responded to that, expanding to house about 3.4 million households in England, which is an increase of one million since 2005,’ he said.

‘There is recognition about the flexibility of the sector. It isn't a last resort, it is actually a sector which is the choice for people who do want that flexibility, who may want to move to work,’ he explained.
‘It provides housing for those who can't access other forms. We know social housing is hugely under pressure and home ownership is more and more difficult for first time buyers,’ he added.

David Salusbury, chairman of the NLA , National Landlords Association, said it was encouraging to hear such positive comments from senior government level about the important part the private rented sector plays in the UK housing solution.

‘It is vital that the UK is able to offer a diverse housing mix, and the NLA will continue to work with the government to help provide flexible options in this time of high demand,’ he added.

The private rented sector has grown dramatically over the last decade accounting for 70% of new household formation, according to new research from CBRE. The make up of the sector has undergone a fundamental change with the proportion of housing benefit recipients living in such accommodation fast approaching 50%.

In the wake of the Government's new housing strategy, which largely reiterated existing proposals for PRS growth, CBRE has questioned its focus on owner occupation and called for action to support PRS investment.

PRS has outperformed commercial property and equities both in terms of volatility and total return with average returns of 10.5% over the last decade. CBRE has earmarked six UK cities with gross yields over 6% that could prove attractive to investors. These are Leicester at 6.4%, Sheffield and Coventry both at 6.3%, Stoke-on-Trent at 6.1%, and Reading and Birmingham both at 6%.

‘Demand is especially high in the private rented sector at present with first time buyers priced out of the owner occupation market, immigrants and increasing student numbers all looking for rented housing,’ said Jennet Siebrits, head of residential research, CBRE.

‘We consider the private rented sector to be a critical plank in the provision of housing supply and the UK is currently suffering from an absolute shortage of places for people to live. There have already been a number of independent reviews to analyse the barriers to large scale investment in the private rented sector, which could deliver the homes to meet demand, and what we need now is action,’ Siebrits added.