An analysis of the private rental sector by Hometrack claims to find that 71 per cent of the UK is given over to “inactive markets” and just 7 per cent of the country comprises high concentrations of rental supply and strong turnover, or “mature markets.”
Hometrack argues the results shows that the private rental sector does not work everywhere.
Hometrack chief operating officer David Catt says, “The risk that lenders take is in balancing the loan against the fundamentals of the rental market both geographically and by price. Our analysis shows that there is little point in investing in the private rental sector in locations where a viable rental market simply doesn’t exist.”
Mature markets account for 29 per cent of the UK’s housing stock against the 38 per cent accounted for by the inactive markets.
London has both the greatest concentration of rental properties and pool of demand, leading to the availability of some of the country’s highest rents. The average rent on for a two bedroom home in London is three times higher than elsewhere in the UK.
Outside of London, tenants unable to raise a deposit to buy are paying a monthly premium of between 5 per cent and 10 per cent over the cost of purchasing a home.