Buy-to-let property approaches £1 trillion mark

Buy-to-let property approaches £1 trillion mark

Buy-to-let property in the UK is approaching a cumulative value of £1 trillion, new research suggests.

Summary:

  • The property portfolio used to generate buy-to-let returns in the UK is now worth £930.7 billion
  • It is set to pass the £1 trillion mark by mid-2015, following a £302 billion rise since 2009
  • Total investor rental returns for the first half of the year reached £44.8 billion

Over the past five years, the value of the UK’s rental property has increased to be worth £930.7 billion.

The figures, highlighted from official data by mortgage provider Kent Reliance, mean that since 2009 buy-to-let properties have generated capital growth of £302 billion, while landlords’ housing assets are now worth 3.5 times their 2001 value.

According to the lender’s analysis, investors’ property assets will surpass the £1 trillion mark in mid-2015.

Andy Golding, Chief Executive of OneSavings Bank, which owns Kent Reliance, explained that there was an ongoing trend towards renting, mirroring the housing markets on the continent.

He explained: “While for many it is a lifestyle choice, the ongoing squeeze on wages, rising house prices, not to mention difficulty in obtaining sufficient mortgage finance, is accentuating this shift in tenure from owner occupation to long-term renting.”

From a property investment perspective, this means that not only are buy-to-let owners securing strong capital growth, they are also seeing rental returns rise as high tenant demand ensures the most sought-after homes and apartments command record rates.

In the first six month of the year, investors accumulated total rental returns of £44.8 billion. This total to June was 5.5% higher than the corresponding period in 2013 and equivalent to nearly half the UK’s total annual household expenditure on food.

With such strong and sustained returns available, demand for buy-to-let developments is also at a record high, as many people see a property purchase as an excellent way to supplement their income. Effortless investments such as student accommodation even allow investors to take a hands-off approach while enjoying investment returns.

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