In a collaborative effort, prominent figures from the trade, lending, and advisory sectors have come together to produce a comprehensive report shedding light on the profound economic impact of private renting within the UK. This report, a result of joint efforts by the National Residential Landlords Association, Paragon Bank, and the PwC business consultancy, underscores the vital role played by small and medium-sized private landlords, particularly those with 15 or fewer properties. These landlords are revealed to be the backbone of the rental market, contributing significantly to both job creation and economic growth.
The research findings reveal a multifaceted contribution of private landlords to the economy, extending beyond the confines of the rental sector itself. Notably, small and medium-sized private landlords are found to be responsible for directly and indirectly supporting over 390,000 jobs. This employment boost encompasses various industries, highlighting the interconnected nature of the economy and the ripple effects generated by private rental activity. Moreover, the report underscores the resilience and adaptability of the private rental sector, which has proven to be a vital pillar of economic stability, particularly during times of uncertainty.
Perhaps most strikingly, the research underscores the substantial financial footprint of the private rental sector within the broader UK economy. Specifically focusing on England and Wales, the report reveals that the private rental sector makes a significant gross value added (GVA) contribution amounting to £45 billion. This economic injection not only underscores the sector’s significance in driving economic activity but also underscores its potential as a key driver of recovery and growth in the post-pandemic landscape.
The report highlights the substantial role played by the private rental sector in supporting employment across the UK, with over 390,000 jobs linked to activities within the sector and its broader supply chain. This underscores the social and economic significance of the rental market, reflecting its integral place within the national economy.
Conducted by PwC, the research delves into the annual revenue generated by small and medium-sized landlords, utilizing regional data to assess the overall size of the private rental sector and the average revenue per rental property. Through various scenarios, the analysis offers insights into the potential ramifications of a contraction in the sector’s size on landlords, tenants, and associated industries.
According to the report’s findings, even a modest 10% reduction in the size of the private rental sector could lead to a significant £4.5 billion decline in the UK’s Gross Value Added (GVA). Such a contraction would also necessitate the creation of alternative employment opportunities to absorb 39,000 jobs, underscoring the interconnectedness of the rental market with broader economic stability and employment dynamics.
In contrast, a projected 10% expansion of the sector could potentially boost the Gross Value Added (GVA) associated with the private rental market by £4.5 billion. This growth trajectory could also lead to an estimated increase of around 39,000 jobs supported by the Private Rented Sector (PRS).
According to a statement from the NRLA, the report emphasizes the critical need for all stakeholders to recognize the broader significance of the sector amidst ongoing supply challenges. NRLA Chief Executive, Ben Beadle, highlights the pivotal role played by the private rented sector in furnishing both quality employment opportunities and essential rental accommodation nationwide. These insights further underscore the potential for continued sector growth to bolster employment prospects in the PRS in the years ahead.
“We anticipate that this report will stimulate further dialogue on the necessary measures to achieve these objectives.”
Richard Rowntree, Managing Director of Mortgages at Paragon Bank and a frequent contributor to Landlord Today, emphasizes the substantial economic and employment contributions made by landlords. He highlights their role in facilitating labor mobility, particularly within the Private Rented Sector (PRS), which boasts the highest proportion of employed tenants compared to other housing tenures.
James Bailey, UK Housing Leader at PwC UK, underscores the importance of smaller landlords, who account for approximately 80% of the estimated 4.8 million properties in the private rented sector in England and Wales. He emphasizes that this segment contributes £45 billion annually to the wider economy, highlighting the sector’s significant footprint in the overall economy.
Click here to access the report’s full conclusions and data.
