One in six homes are now privately rented as B2L continues to expand

29 August 2011 | By Natalie Thomas

One in every six UK homes is now in the private rental sector, latest figures from the Department of Communities and Local Government show.

Some 17.4% of homes are privately rented, an increase from 16.4% in 2009 and up 229,000 by number.

Since 2000, the number of properties in the sector, which currently stands at 3.9 million, has risen by 1.8 million.

Meanwhile, the number of properties in the owner-occupied sector fell from 14.9 million in 2009 to 14.8 million last year the lowest it has been since 2000.

The figures come after a prediction by Capital Economics last week that buy-to-let could account for 20% of all mortgages by 2015.

Nigel Terrington, chief executive of Paragon Group, says: “More people are now relying on the sector than ever before and we are seeing a change in perception towards it.

“The rise in private rental homes is fuelled by a combination of landlords buying property with cash and buy-to-let mortgages, individuals letting out homes they have inherited and owners deciding to let their property.”

But Bob Hunt, chief executive of Paradigm Mortgage Services, says there is concern that greater competition might result in a return to the past with significant rises in maximum LTVs and a softening of criteria particularly around rental cover and income requirements.

He would like to see lenders maintain deposit requirements of around 20% for buy-to-let mortgages and rental cover to remain at the 120%-plus level.

He says: “It is important that we maintain a responsible approach to buy-to-let lending given that it will suit no-one to return to a time when lenders offered 100% LTV mortgages and rental cover requirements became almost irrelevant.

“Buy-to-let has to work for all concerned and it is important that deposit levels are maintained at their current amount and that lenders do not climb too far up the risk curve too quickly in an attempt to secure volume in an increasingly competitive market.”

He is also urging intermediaries to make sure that their clients, especially first-time landlords, are aware of their responsibilities in terms of their duty of care to their tenants.

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