According to Savills, this was the largest decline recorded in the last century, and in the last three years, the value of the PRS has dropped by £79bn.
Savills said this was partially because rising house prices failed to offset the loss of PRS stock.
Lucian Cook, head of residential research at Savills, said: “Over the past 25 years, we’ve grown accustomed to a story of the private rented sector expanding at the expense of people’s ability to get onto the housing ladder.
“But while deep-seated housing challenges remain, lighter regulation in the mortgage market and tighter oversight of the private rented sector are gradually beginning to shift that narrative.”
Cook said changes in tenancy legislation, higher operating costs and increased mortgage rates had led private landlords to review their portfolios.
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He added: “Larger landlords, better equipped to absorb added costs and requirements, have taken on some of this stock, contributing to a more professionalised PRS. But others have been sold to owner-occupiers, reducing the sector’s overall size.”
|
£bn |
2025 |
2022 |
Change |
Percentage change |
|
Mortgage-free owner-occupied |
3,455 |
3,316 |
+139 |
+4.2% |
|
Owner-occupied subject to a mortgage |
3,132 |
2,935 |
+197 |
+6.7% |
|
PRS |
1,477 |
1,556 |
-79 |
-5.1% |
|
Other |
672 |
635 |
+37 |
+5.8% |
|
Privately owned UK housing |
8,735 |
8,441 |
293 |
+3.5% |
|
Social |
443 |
400 |
+43 |
+10.6% |
|
All UK housing |
9,177 |
8,842 |
+336 |
+3.8% |
Mortgage debt boosts value of privately owned homes
Meanwhile, the value of owner-occupied homes rose by £185bn last year, following an increase in mortgaged properties and first-time buyer activity. Savills said this was despite the rising levels of mortgage-free homeownership.
Its data showed that the value of privately owned housing increased by 3.5% in the last three years, supported by a 4.7% rise in the level of mortgage debt held by owner-occupied households.
Savills found that the PRS was the only housing sector that contracted over the last three years, falling by 5.1% despite the UK housing sector growing in value by 3.8% overall or £336bn.
Cook said: “With more former PRS stock available to buy, first-time buyer activity has been relatively strong in the context of post-credit crunch levels. This has been supported by the less stringent application of mortgage regulations, falling mortgage rates and rising wages.
“But there are still significant barriers to owning a home, and part of the growth in mortgaged homeownership is down to people taking longer to pay off their mortgage debt. The reduction in homes available to rent will also continue to push up rents, posing challenges to those who are struggling to save for a deposit.”
