The number of renters has soared as mortgage lenders have tightened up borrowing by demanding larger deposits and tighter restrictions imposed on lending.
A squeeze on finance has also put a brake on buy to let borrowing, with much of the market activity generated by remortgages rather than buying more homes and buying new houses. New homes property developers are now having to offer exceptional deals including 100% home exchanges as potential customers are holding out on moving.
The report forecasts a massive 20% increase in rents over the next five years, as the number of rental properties is soaked up by increasing demand.
Around 4.8 million privately rented homes generate £48 billion of rental income a year, says the report, which will soar to £70 billion by 2016 if the predictions prove correct.
“We expect a 23% increase in the number of private rented households, which is about 1.1 million extra homes,” said Cook (Lucian Cook, director of Savills research) “That’s an idea of the scale of opportunity for institutional investment.”