Traditional private landlords are rapidly being replaced by pension funds and private equity firms seeking to capitalise on the lucrative build-to-rent (BTR) sector, a leading figure has claimed.

A combination of tax rises, high mortgage rates and red tape means becoming a BTL investor 'no longer makes financial sense', according to Charlie Bryant (main image), CEO of Zoopla’s parent company Houseful.

He says the decline started after the removal of tax relief on buy-to-let mortgages and the 3% stamp duty surcharge introduced on second homes in 2016.

“Put that into the context of the potential returns from alternative investments, whether that is bonds, the equity market or, frankly, putting your money with National Savings and Investments, and the attractiveness of owning a rental property as an individual private landlord, buying it for yield, is not there,” he tells The Telegraph.

Shrinking

Figures from UK Finance show that the buy-to-let mortgage sector recently shrunk for the first time since 1996, when bespoke loans for property investors were first introduced.

This shift comes as the government has vowed to amend planning rules to build 1.5 million homes, potentially favouring corporate build-to-rent investors who can develop and manage apartment blocks with economies of scale.

“Undoubtedly the next iteration [of the rental market] is, particularly with potential planning changes, will be larger, more corporate institutional landlords, under the build-to-rent guise,” says Bryant.

Labour plans

Industry experts believe that build-to-rent will play a crucial role in Labour’s housing plans, particularly as record levels of immigration drive demand in the rental sector.

“Net migration remains high,” he adds. “The UK remains a very, very popular destination for overseas students and migrant labour. We are still a very strong financial centre and therefore we get a lot of expats coming in.”

He believes the government should build a variety of homes, including social and affordable rent to tackle growing demand in the rental sector.