Private rented stock levels have crept up across Britain by just 0.8%, which goes some way to explaining why rental growth stood at 11.5% in May.
There’s been a slowdown in the East Midlands (-7%), Scotland (-5%), East of England (-2%), West Midlands (-1%), Wales (-1%) and Yorkshire and the Humber (-1%) have all seen a decline.
Despite this short-term negative trend, Octane Capital estimates that the sector will bounce back by 2025.
The firm reckons the UK rental market will grow by a 6.5% by 2025, bringing 308,000 homes to the sector.
Jonathan Samuels, chief executive of Octane Capital, said: “The performance of the private rental sector has been somewhat mixed of late, with growth stagnating in some regions, even declining in some cases.
“This is hardly surprising, with a raft of legislative changes designed to deter landlords from the private rented sector complemented by a severe drop in demand during the pandemic.
“Despite this, the market remains substantially larger than it was back in 2005 and looks set for a return to form over the coming years, growing in size across all but one area of Britain.”
West Midlands sees biggest long-term growth
The West Midlands has seen the most market growth in terms of the private rented sector, which has increased by 113% since 2005, Octane Capital analysis shows.
The North West (98%), Wales (86%) and East Midlands (86%) have also seen some of the largest PRS market growth since 2005.
The South East has added lowest percentage of new homes, at 62%.
From now until 2025 Wales is expected to post the strongest growth, with the privately rented sector increasing in size by 9%.
Hamptons research shows that rental growth stood at 11.5% in May, led by London (15.7%), the South West (13.4%) and the North (10.3%).