BLOGS

The PRS is not what it used to be

For decades, the image of the private rented sector was a shared flat in a city centre, occupied by recent graduates and young singles between life stages. That image is now firmly out of date.

According to the English Housing Survey, the private rented sector in England alone now houses approximately 4.6 million households — roughly double the figure recorded at the turn of the century. Critically, the composition of that renter population has undergone an equally dramatic transformation. Families with dependent children now account for around a third of all private renting households in England, up from a much smaller share in 2001. The young single professional has not disappeared, but they are no longer the defining demographic of the sector.

This is not a temporary blip caused by affordability pressure at a single point in the cycle. It reflects a generational shift in housing tenure that is now sufficiently entrenched to reshape the investment case for residential landlords and institutional capital alike.

Why families are renting for longer — and what the data tells us

The structural drivers behind this shift are well-documented. House prices relative to earnings have made ownership increasingly difficult for households in their thirties and forties. ONS data consistently shows the average age of a first-time buyer in England rising, now sitting above 33 nationally and materially higher in London and the South East. Families who might previously have bought before having children are now renting through those years — and, in many cases, beyond them.

Average tenancy lengths reflect this. Where the PRS was once characterised by short lets and high turnover, Rightmove and Zoopla data have shown sustained tenancy lengths creeping upward across most UK regions. Families, by their nature, value stability: school catchments, community ties and the disruption of moving with children all act as powerful anchors. REalyse data shows that three-bedroom properties across many suburban markets are now let for materially longer average periods than studio or one-bedroom equivalents in the same postcode district — a pattern with direct implications for void rates and net income for investors.

Longer tenancies also change the maintenance and management profile of a rental asset. Family homes generate consistent wear, but the flip side is lower void risk, lower re-letting costs and a more predictable cash flow — qualities that institutional investors in the build-to-rent (BTR) sector have been quick to recognise.

Demand is shifting: what property types and locations are winning

The clearest signal in the data is demand pressure on larger properties. Across Rightmove's portal data, searches for three- and four-bedroom rental homes have grown at a faster rate than searches for one-bedroom flats over the past five years. In many suburban markets, supply of this stock in the PRS remains structurally constrained: the investor landlord base is still heavily weighted toward smaller units, particularly flats acquired during the buy-to-let boom of the 2000s.

REalyse comparables data illustrates the resulting pricing dynamic. In a range of commuter-belt markets — locations such as Hertfordshire, the East Midlands, parts of the North West and suburban Greater Manchester — average asking rents for three-bedroom houses have risen at a notably stronger pace than one-bedroom flats over a 12-month period, with tighter supply underpinning that outperformance.

Geography is also shifting. As hybrid and remote working have become structural features of UK employment, family renters are increasingly looking beyond zone 2 and 3 London or the immediate core of regional cities. Markets such as Swindon, Coventry, Nottingham, Leicester and parts of West Yorkshire are seeing sustained rental demand growth in suburban postcodes where good schools, green space and transport links converge. REalyse yield data across these markets frequently shows gross yields in the 5–7% range for three-bedroom houses — often more attractive on a risk-adjusted basis than inner-city one-bedroom flats trading at tighter initial yields but with higher turnover.

Scotland's private rented sector reflects similar dynamics, with the English Housing Survey's Scottish equivalents showing sustained family renting in suburban Glasgow and Edinburgh commuter zones, even as policy interventions — including rent controls under the Cost of Living (Tenant Protection) (Scotland) Act — have complicated the supply-side picture. In Wales, the Renting Homes (Wales) Act 2016 introduced longer minimum notice periods, a change structurally aligned with the preferences of longer-term family tenants even if its short-term implementation created friction for some landlords.

Implications for investors: rethinking the unit mix

The data makes a clear strategic case for revisiting the standard buy-to-let unit mix. The most popular investment archetype of the last two decades — a one- or two-bedroom flat in an urban centre — is not poorly positioned per se, but it no longer maps neatly onto the fastest-growing tenant segment.

Investors and developers willing to target the family renting market are looking at a different set of criteria. Garden space, proximity to good schools, off-street parking, and proximity to retail and amenity rather than nightlife are the variables that matter. These are attributes more commonly found in semi-detached and terraced housing stock in suburban and edge-of-town locations — stock that has historically been under-represented in institutionally managed rental portfolios.

The BTR sector has begun to respond. Several major operators are now delivering or planning family-oriented BTR schemes with larger unit mixes, private outdoor space and management models designed around longer tenancies. REalyse planning data shows a growing pipeline of BTR consents in suburban local authority areas that would have been considered unconventional BTR territory five years ago — a direct response to where demand is migrating.

For private landlords, the strategic implication is more immediate. Those with portfolios of small urban flats may find it worthwhile to model whether selective disposal and redeployment into suburban family homes improves both yield and tenancy stability. REalyse's comparables and yield analysis tools make it possible to run these location and property-type comparisons at postcode district level before committing capital.

Outlook: a structural shift, not a cyclical one

It would be a mistake to treat the family renter as a temporary phenomenon — a product of a particularly difficult affordability cycle who will revert to ownership as soon as rates fall. The evidence suggests otherwise.

The homeownership rate for households in their thirties has fallen significantly since its peak, and ONS household projections point to continued growth in private renting among older age groups. A family that began renting at 32 and is now 40 has frequently adapted to tenure rather than experienced it as a transitional inconvenience. Spending on home improvements and longer-term neighbourhood ties in the private rented sector are both rising — markers of a cohort that has accepted renting as a durable status.

For the UK residential property market, this means the investment case for well-located, appropriately-sized family rental stock is not just a near-term yield play. It is a structural position aligned with where the demand base has structurally moved. Investors, developers and lenders who build their strategies around this evidence — rather than the outdated image of the young, mobile, city-centre renter — are better placed for the decade ahead.