UK landlords saw total annual returns rise £5.8bn over the last 12 months.
According to a report from Kent Reliance, the private rented sector has undergone massive expansion in the last year with an additional 150,000 extra households in the year to March.
As the size of the sector grows, and house price growth remains robust, total value of the PRS has increased 11% to £990.7bn. This means the rented sector is now worth 43% of the value of the UK Stock Market against 12% in 2000.
This rapid growth has led Kent Reliance to forecast that on present trends, the sector will increase from 4.8m households in Great Britain to 5.5m by 2020.
House price inflation, at 7.5% is still brisk and by the end of March, the average property generated return of £24,221 in rental income and capital gains, just £1,000 less than the average salary over the past 12 months.
Across Great Britain, this meant that annual returns seen by property investors totalled £111.5bn, or £67.2bn in capital gains, and £44.3bn in rents.
In total, this figure was £5.8bn higher than the £105.7bn landlords saw in March 2014, although it represented a decline compared to the recent peak of £137.5bn in September, when capital gains were at their highest in at least seven years.
Andy Golding, chief executive of OneSavings Bank, which trades under the Kent Reliance and InterBay brands in Buy to let, said: “Buy to let has come of age, moving from a niche asset class to one big enough to rival the stock market. Landlords are seeing the benefit of a structural change in Britain’s housing market, with tenant demand ever strengthening.
“Yes, house prices are showing signs of steadying somewhat, but growth remains brisk. Long-term price inflation is not in danger, given the gaping chasm between growing demand for housing and the number of houses being built each year. Combined with the dearth of high LTV lending to first time buyers, this will continue to buoy demand for rental accommodation, as well as landlords’ returns, and the sector will continue to expand.”
A Freedom of Information request of HMRC by the Guardian this week revealed landlords continue to claim tax benefits equivalent to £14bn a year.
