According to a new report from Savills, landlords investing in property made £177 billion from rising UK house prices over the last five years.
A lack of housing construction – which is unable to keep up with demand – and rising prices have made it harder for first time buyers to get onto the property ladder, forcing many to stay in rental accommodation.
This has spurred the demand for rental property in the UK which has ultimately created a profitable environment for landlords.
The estimate of £177bn is based on capital growth alone and excludes rental returns.
Rising demand for rental property
Last year the cost of renting hit an all-time high, with landlords receiving a return of 12.7% in the year to August.
Experts forecast that activity levels are likely to remain strong in 2015.
Highlighting the strength of the UK’s rental market, a recent report from Sequence recently stated that in the year to November 2014, there was a 20% rise in the number of agreed tenancies in the UK.
Since the financial crisis, there has been an approximate 57% climb in privately rented housing in the UK, with the total value of the sector now surpassing the £1tn mark for the first time.
Total value of homes increases
The total value of homes in the UK has increased by £543 billion over the past year, with the total now standing at £5.75 trillion (Savills). Property values have increase by £966 billion over the last 5 years.
Research from Rightmove shows that property prices may increase by a further 30% over the next five years, providing further scope for landlords to secure strong capital growth potential.
With property prices set to continue to rise and a strong demand for rental property, now could be a great time for investing in property.