What is it?
The initials might not be recognised by everyone, but for those in the know, PRS simply means the Private Rental (or Rented) Sector – populated by private sector landlords and the growing number of private tenants they accommodate.
Why is it important?
The importance of the PRS may be measured in terms of its sheer size and the proportion of the nation’s population that it houses – a population that is currently growing significantly.
Recent statistics from the English Private Landlord Survey (EPLS) revealed that the PRS in England alone is now the second largest tenure and is home to 19% of all households.
England’s PRS is now more diverse than ever, transforming significantly over recent decades. Between 2008-09 and 2023-24, the number of households in this sector increased by 52%, growing from 3.1 million to 4.7 million households.
Also, faced with further difficulties in the state of health of the housing market generally, still more people are likely to turn to the private rented sector for their homes.
The economics of buying to let
The private sector landlord of buy to let property is in the business of generating an income stream from the rents received. The fact that it represents a business proposition is reflected in the way in which applications for buy to let mortgages are assessed and granted and also the special category of landlord insurance necessary for protecting that business investment.
The financial objective of the landlord, of course, is to ensure that income from rents exceed the costs of owning the let property – operating expenses which may take many forms but are principally the costs of servicing a buy to let mortgage, ongoing repairs and maintenance of the property, letting agency fees and the need for adequate landlord insurance to safeguard both the structure and fabric of the property and in defence of possible liability claims against the business itself.
The growth of the PRS
The growth and transformation of the PRS are not without challenges. Landlords are increasingly faced with higher operating costs, including mortgage repayments, maintenance expenses, and the cost of complying with new regulations – with many leaving the sector.
However, many view the current market conditions as an opportunity to invest in buy-to-let properties, capitalising on the strong demand and potential for rental yield increases.
In summary, the UK private rented sector is a dynamic and ever-changing landscape that reflects broader social and economic shifts. With a rapidly growing number of households and an expanding range of property types, the PRS offers both opportunities and challenges for those involved.
Whether you are a tenant seeking flexible living arrangements or a landlord exploring investment possibilities, staying informed about market trends and regulatory changes is essential.
