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Posted on March 3rd 2015 by admin-movingin

Massive investment needed as private rental sector booms

If the private rented sector continues growing at current rates, it will require a £1.4 trillion investment in the next 20 years, even if house prices do not go up.

The claim comes from a buy-to-let lender, Landbay.

It says that since 1991, the rental market has grown by an average of 4.4% each year.

Assuming the same rate of growth, by 2035 the sector will have swelled to more than double the number of private rental properties that there are now.

Landbay’s projection is that the 4.9m properties currently in the private rented sector will expand to 13.2m.

If house prices do not remain static but continue growing at their average rate since 1990 of 5.1% per annum, the sector would need an investment of £4 trillion by 2035.

Landbay’s predictions take into account demographics such as the projected growth in the UK population, which is expected to grow by 9.6m people to reach 73.3m in 2037, and longer life expectancy.

By 2037, life expectancy at birth is projected to reach 84.1 years for males and 87.3 for females, increasing by five years since 2012.

John Goodall, co-founder and CEO of Landbay, said: A substantial amount of new investment is needed to provide homes that will be needed over the next two decades, particularly if those homes are to be high-quality homes that people want to live in.

“The UK’s housing stock is under significant pressure because not enough new houses are being built, the population is growing, and people increasingly prefer to live in smaller, high-quality dwellings.

“The scale of the investment needed to ensure the sufficient supply of high-quality properties means that multiple solutions are needed – from build-to-let by pension funds, the government’s own ‘Build to Rent’ scheme and further housing debt guarantees from the UK government, through to continued investment by private landlords themselves and an active and vocal private rented sector taskforce.”