It would appear that Savills and Rightmove have now reached the same conclusions as we did last month on the future of the PRS over the next few years. They have backed up our analysis with a few more figures, but it is heartening to know we are on the right track with predicting the future!
According to their latest briefing, the number of people who are living in rented accommodation has nearly doubled since 2002. Furthermore the indicators are that by 2016 we will need more than a million additional rental properties to meet demand.
Savills are also predicting that only a quarter of the £2bn required to fund this growth will come from the buy to let sector of the market, the majority of the funding is likely to come from institutional investors (see our article on Build to Let)
Lucian Cook, director of Savills residential research, said: “Meeting the growing demand for private renting and the changing profile of tenant demand are perhaps the greatest challenges facing both the housing industry and policy makers.
“The dynamics of supply and demand make a great case for investment in this sector, and rising rents and lower capital values have begun to attract private investors back into the market. Investment returns relative to other asset classes will dictate the pace of investor entry to this sector.”
Lucian is absolutely right; however, the government have missed a trick in the last budget by not offering some Stamp Duty concessions to institutional investors buying New Build to Let. At College and County, we think that there is a need for some such incentive to get the ball rolling and trigger renewed activity in the development and construction sector.