Corporate investors bypass the tax package to settle…

Leading market analysis suggests the private rental sector could benefit from large-scale investors seeking refuge in bricks and mortar.

Home, the real estate platform that includes detailed monthly market analysis for the rental and sale sectors, says that with interest rates still well below the rate of inflation, investors can look to yields increasing from purchase to rent for more comfort.

The latest snapshot from Home reads: “As rental yields increase, we expect demand for UK property to remain high and possibly increase through to 2023 as investors (particularly corporate investors who can more effectively circumvent capital gains tax) seek the relatively safe returns offered by bricks and mortar, facilitated by negative real interest rates.

It also gives facts and figures on the still huge gap between supply and demand for private rental accommodation.

It says: “The number of properties available for rent is down overall (down 27% in the past 12 months). This is mainly due to the sharp drop in Greater London, which fell by 51% over the same period. The effect of this rental drought on rents in Greater London is evident with annualized increases averaging 25.9%, but well above those in more central boroughs.

As for the broader sales market, particularly in light of the six successive base rate hikes announced by the Bank of England, Home downplays the impact and says a return to “market normalcy” is underway anyway, and without any fear of an accident.

It indicates that the selling stock is beginning to increase, albeit slowly and at different rates in different parts of the country.

Home plays down talk of a dramatic slowdown in the sales market, with a significant effect on prices, and says that even compared to a year ago, the market is still strong.

He says: “Each regional market is still outperforming its August 2021 performance. Additionally, data shows that unsold goods are still generally spending significantly less time on the market than they did a year ago across all English regions, in Scotland and Wales.

And he goes on to say: “[Sales] Inventory totals are returning to more “normal” levels, but it will be some time before they actually do (between 400,000 and 500,000 properties). For this to happen, supply will have to increase rapidly and demand will have to drop significantly. Given the relatively small increase in mortgage costs (the latest 0.5% increase from the Bank of England equates to around £100 extra per month on outstanding mortgage debt of £250,000), demand will only be not significantly slowed down.