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The rental property market has boomed in recent years as more people find themselves unable to get on the property ladder.
According to the government’s 2010-11 English Housing Survey, 34% of England’s 14.5m households were in the rental property sector. Of these 3.8m (17.5%) were in the social housing sector and 3.6m (16.5%) were private rented homes. Since 2000 the number of private rented homes has almost doubled.
For landlords the financial rewards can be great. The average UK rent is around £1,000 a month and the typical median average monthly rent for the UK is £750. The annual turnover for the UK property market is estimated at around £43bn and the estate agency Savills estimates this could soar to £70bn by 2017.
A further indication of the scale of the UK property market has come from the Council of Mortgage Lenders, which estimates the total value of buy-to-let mortgages was £159.4bn in 2012. In addition, an estimated 1.4m homes are advertised for rent each year.
With such a strong demand for rental property among tenants comes a significant reduction in risk for landlords. While the average home for sale is on the market for 200 days, the average (mean) time a property for rent is on the market is 38 days. The typical (median) time a rental property is on the market is just 20 days.
It is worth noting that some letting agents keep rental properties advertised even after they are let, which can prove frustrating for tenants. The average time a rental property is advertised as being on the market is 69 days, which is 31 days longer than the average (mean) time a property is actually available for rent.
The growth in the rental property sector has also seen an increase in the number of rental price indices.
Some, for example LSL’s Buy to Let Index, are aimed at the UK’s 1.2m landlords and other property professionals, such as the UK’s 13,000 lettings offices, which have an average of 20.5 properties available to rent per branch.
Others provide useful consumer focused and regional rental price data about homes to rent. Meanwhile, the Move with Us Rental Index provides rental price information for both renters and landlords.
A word of caution is advised when looking at average rental property price figures of homes to rent. While some use asking prices, others base their average monthly rent figures on agreed rents, which can be around £100- £150 lower than the average national asking price.
Who is taking advantage of this rental property sector boom? Small landlords dominate the private rental market, with four out of ten landlords owning only one or two properties, according to the Association of Residential Letting Agents (ARLA). However, there are a number of large institutional rental property landlords, of which Grainger plc, which owns around £2.3bn worth of property and manages a further £3bn worth of property assets, is the largest.
There are also a number of large social housing associations in the rental sector. The top ten housing associations, including Sanctuary Housing Group, London & Quadrant Housing Trust and The Riverside Group Limited, managed and owned more than 400,000 properties in total in 2011.
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