Across the UK, the private rented sector grew by some two million households in the decade to 2011. The largest growth was in the period since 2007 due to constrained mortgage availability.

Over the past few years, the government has introduced several initiatives to support home ownership, most notably the Help to Buy scheme. Yet, despite this, we expect the sector to grow by a further one million households in the next five years.

This increase in demand in the mainstream private rented sector has not been met with a similar increase in the supply of rental properties. This has resulted in rents being pushed up.

In the mainstream markets, supply is likely to remain constrained, but less so in the more valuable markets which is where new activity is concentrated and where overseas investors are particularly active.

Over 2013 we saw marginal rental growth in prime London but, given the recent increase in applicants and improved outlook and prospects for the economy, we expect this to pick up in 2014. From 2016 onwards we anticipate rental growth to be increasing by 4.5% per year.

Taken from
Spotlight: Prime Rental Markets - January 2014