Market overview BTL sector grows by £239bn

MARKET OVERVIEW: BUY-TO-LET SECTOR GROWS BY £239BN

Octane’s research reveals that the UK’s buy-to-let sector has grown substantially in value over the last five years, increasing by almost £240bn

We analysed the level of privately rented stock across each region of the UK in relation to current property market values to find the total worth of the buy-to-let sector. We then compared this buy-to-let bricks and mortar value to 2017 to reveal how it had changed over the last five years.

CURRENT BUY-TO-LET MARKET VALUE

Our team’s analysis shows that there are an estimated 5.5 million private rental properties within the UK rental sector and based on current market values we estimate the total value of the nation’s buy-to-let stock to be £1.7 trillion.

With just over one million private rental homes, the London market accounts for 19% of the UK’s total buy-to-let properties. With the capital also home to the highest property values, it sits top where the total worth of the buy-to-let sector is considered to be over £500bn in value.

The South East is home to the next most valuable buy-to-let market at £247bn, with buy-to-let values also exceeding £100bn in the East of England (£168bn), South West (£156bn), the North West (£110bn) and the West Midlands (£104bn).

LARGEST UPLIFT IN BUY-TO-LET MARKET VALUE

While the level of privately rented homes has remained largely flat across the UK over the last five years, the total value of the buy-to-let sector has seen a significant boost due to strong house price growth.

Table shows the total value of the buy-to-let sector and change since 2017 based on the number of private rental properties and current market values - Sorted by highest current estimated value

Location Total private rental sector estimated stock (latest) Current average house price Current estimated value of BTL sector Change in current estimated value of BTL sector (£)

Change in current estimated value of BTL sector (%)

London 1,042,130 £519,934 £541,839,558,519 £56,914,371,748

South East

670,121 £369,093 £247,336,845,531 £15,833,094,340 East of England 497,156 £336,937 £167,510,132,782 £27,446,223,067

South West

506,248 £308,497 £156,175,827,233 £34,015,293,422 North West 556,005 £197,797 £109,976,097,716 £17,207,632,758 West Midlands 450,746 £230,888 £104,071,725,925 £23,520,442,269

Yorkshire and the Humber

482,360 £191,036 £92,148,092,701 £18,766,926,342 11.7% 6.8%

19.6%

27.8%

18.5%

29.2%

25.6%

East Midlands 390,747 £229,277 £89,589,386,301 £18,490,170,321 Scotland 370,845 £182,755 £67,773,737,256 £10,281,520,850 Wales 204,995 £199,877 £40,973,714,338 £9,549,916,076

North East

203,163 £149,249 £30,321,963,529 £3,538,958,900 26.0% 17.9% 30.4% 13.2%

Northern Ireland 113,989 £159,109 £18,136,718,151 £3,796,852,989

26.5% United Kingdom 5,488,506 £270,708 £1,665,853,799,982 £239,361,403,080 16.8%

While London house price growth has lagged behind the rest of the UK of late, the capital has still enjoyed the largest uplift in buy-to-let market value with a £57bn jump in cash terms, followed by the South West (£34bn) and the East of England (£27bn).

The government has tried its hardest to dampen investment into the private rental sector in recent years, with a string of legislative changes around tax relief, stamp duty and tenant fees reducing the profitability of buy-to-let investments.

The pandemic has also proved problematic for some landlords who have suffered lengthy void periods due to factors such as the tenant eviction ban and a reduction in rental demand across our major cities, in particular. Despite all of this, the sector has stood tall and continues to provide the vital rental market backbone that so many are reliant on.

At the same time, the nation’s landlords have benefited from a considerable level of capital appreciation on their buy-to-let investment and the value of the sector as a whole has increased substantially.

Let’s just hope that whisperings of a higher rate of capital gains tax remain just that, as any further increase could spur a reduction in available stock, causing the total value of the market to decline in the process.

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