Private rented sector statistics 2021

If you fancy being a landlord – or you already are one and are looking to expand your portfolio of properties – it’s important to have a handle on some of the statistics that underpin the sector.

In some ways, being in the business of providing accommodation is relatively less risky than other investment options. After all, there will always be a demand for homes.

But it’s important to keep an eye on the trends within the private rental sector so you can plan ahead and mitigate any risks.

• What percentage of UK housing is privately rented?
• What is the demand for rental properties?
• How can I make my property stand out to potential tenants?
• What rent can I earn as a landlord?
• What does this mean for insurance?

What percentage of UK housing is privately rented?

According to the Government’s English Housing Survey, the proportion of households in the private rented sector (as opposed to owner-occupiers or people living in social housing) has fallen slightly since 2015-16.

But levels have remained stable over the past couple of years and still significantly higher than a couple of decades ago, having doubled in size since the early to mid-2000s.

The survey found that 4.4 million households (which represents 19% of the total) in England were in private rental accommodation in 2020-21. By way of comparison, this was a fall from 20% in 2015-16.

London remains an anomaly, with the high cost of buying resulting in 27% of households living in the private rented sector, compared with 17% in the rest of England.

It means the capital has more private rental households than outright owners, and there are nearly as many privately-rented properties as there are homes owned with mortgages.

What is the demand for rental properties?

Across the UK, the proportion of landlords who reported a significant increase in demand from tenants more than doubled between the start of 2019 and the start of 2021, according to Statista.

During the first quarter of 2021, 31% of landlords saw demand increase as opposed to just 14% who said it had fallen.

Meanwhile, research carried out in late 2021 for Paragon Bank found that nearly seven out of 10 landlords reported rising tenant demand, which was a record level for the survey – and more than a third said the increase was “significant”.

How can I make my property stand out to potential tenants?

The English Housing Survey found that while the energy-efficiency of property in general has improved, there was no significant improvement when it came to homes in the private rental sector.

With energy bills soaring and increases in the cost of living in general, as well as greater awareness from potential renters of the importance of taking positive environmental action, this could be something that forward-thinking landlords might want to address.

Making it cheaper and greener to heat a rental property could give you the edge on those occasions when you’re competing with other landlords to secure new tenants.

Overall, the social rented sector is the most energy-efficient, with two-thirds of properties being in bands A to C when it comes to energy-efficiency ratings.

In the private rented sector (and in owner-occupied properties), the equivalent figure is 42%.

What rent can I earn as a landlord?

According to the Rightmove Rental Price Tracker, the average rental price for a new tenancy in the UK in the first quarter of 2022 was £1,088 per calendar month, which was a significant rise of 10.8% on a year earlier.

London recorded a 3% increase on last year, the biggest jump in rental prices since records began. Average monthly rental prices in London now total £2,193.

What does this mean for insurance?

The English Housing Survey found that 55% of private renters in 2020-21 had some savings, up from 40% a year earlier.

This might reassure landlords that a greater proportion of tenants have something to fall back on if things get tight, and it might give them greater confidence that there’ll be fewer people who can’t meet their rent obligations. On the other hand, it might scare some landlords to think that 45% of tenants have no savings at all.

However, with the cost of renting going up alongside sharp spikes in the cost of living, now is a good time to make sure you’re suitably insured in case you find that your tenants are unable to meet their rental payments.

Taking out an appropriate landlord insurance policy is always sensible, but consider adding rent guarantee insurance to your policy. This will cover the rental income whilst you regain possession of the property if a tenant defaults on the rent, and it comes with legal cover, too.

Adding legal expenses insurance could also come in handy if you find yourself in the difficult position of having to evict tenants who can’t pay what they owe.