Private rental sector to increase by 6% by 2025

Private rental sector to increase by 6% by 2025, with 308,000 more rental homes

Research by specialist property lending experts, Octane Capital, estimates that the UK rental market could grow by a further 6.5% by 2025, bringing the total number of privately rented dwellings to just shy of 5.8m. 

Octane Capital analysed PRS stock levels across each region of Britain since 2005, looking at how they have changed and, based on these trends, how they could change over the coming years.

The latest data shows there are almost 5.5m PRS dwellings across Britain today, 2.4m more than in 2005 – a 79% increase.

While London remains by far the largest private rental market in Britain, it’s the West Midlands that has seen the most market growth, with the size of the sector increasing by 113% since 2005. The North West (98%), Wales (86%) and East Midlands (86%) have also enjoyed some of the largest PRS market growth since 2005. 

The South East has seen the lowest rate of growth during this timeframe, but has still seen an impressive 62% jump. 

However, the performance of the PRS sector hasn’t been as strong on an annual basis. Stock levels have crept up across Britain by 0.8%, however, the East Midlands (-7%), Scotland (-5%), East of England (-2%), West Midlands (-1%), Wales (-1%) and Yorkshire and the Humber (-1%) have all seen a decline. 

Despite this short-term negative trend, Octane Capital estimates that the sector will bounce back by 2025. Based on historic market data and trends, they estimated that PRS stock levels could climb by 6% in the coming years, hitting almost 5.8m. 

London is forecast to remain the predominant force in the PRS market where total volume is concerned, but it’s Wales that is expected to post the strongest growth, with the privately rented sector increasing in size by 9%.

The East of England, East Midlands, South West and North West are expected to increase b 6%, while at -2%, the South East is the only region that Octane Capital predicts will see a decline in total PRS stock levels. 

CEO of Octane Capital, Jonathan Samuels, commented:

“The performance of the private rental sector has been somewhat mixed of late, with growth stagnating in some regions, even declining in some cases.  

This is hardly surprising, with a raft of legislative changes designed to deter landlords from the private rented sector complemented by a severe drop in demand during the pandemic. 

Despite this, the market remains substantially larger than it was back in 2005 and looks set for a return to form over the coming years, growing in size across all but one area of Britain.”

Data Tables

View the full data tables online here.