‘Vast’ growth in value of England rentals since 1990 would have built 3m council homes | Housing

Private landlords in England have made enough money from rising house prices in the last three decades to build at least 3m council homes, research suggests.

Owners of private rental properties have seen their assets grow in value by £400bn since 1990, equivalent to the amount needed to build more than 50 times the number of council homes that were actually built in England in that period.

The windfall calculation, commissioned by the Renters Reform Coalition campaign group and based on Office for National Statistics data, comes as landlords demand tax cuts to help ease the impact of rising interest rates. The National Residential Landlords Association has said many landlords “simply cannot afford to soak up” rising costs and will have to sell up or raise rents.

The growth in capital values means a landlord in London with five properties owned since 2013 has made £655,000 without even accounting for profits from rent.

Fewer than 54,000 council homes have been built in England since 1990, official figures show. They typically require grants of up to £200,000 per home in London and about £100,000 elsewhere, according to the National Housing Federation.

Fergus Wilson, one of Britain’s biggest buy-to-let landlords until a recent sell-off, told the Guardian that he and his wife, Judith, had bought 13 racehorses and 100 acres of farmland with some of the capital gains from selling dozens of homes they bought in the early 2000s on new estates around Ashford in Kent.

The sale of 15 homes they owned on one street – Grice Close – netted them close to £3m in profits, and another 20 homes on the Park Farm estate made nearly £5m.

“Mrs Wilson bought some National Hunt horses and had them trained with David Pipe – she had 28 winners,” he said. “I’ve got an awful lot of agricultural land. You wonder if you’re ever going to get permission to build houses on it.” The rest of their profits are “floating around” in investments, he said.

Last week, the ONS revealed that 43% of renters in Great Britain were finding it difficult to afford their rent payments. Fourteen per cent of renters said that in the last two weeks they had run out of food and been unable to afford more.

Wilson said he believed workers in the NHS and train drivers deserved to be paid more, but when asked if capital gains tax should be increased he replied: “The landlords would hate me if I said that.”

Half of English private residential landlords have owned a home since at least 2010, according to the research. During that time, the average privately rented home has increased in value by 41%, delivering the owner £76,000 in capital gains on top of profits from rent.

Landlords have on average made 23% “year one” cash profits on rental income from 2014 to 2021, according to separate research by Savills, an estate agent, although rising interest rates have pushed that down for landlords with mortgages.

The windfalls in the capital and south-east England are far greater, according to the analysis commissioned from Positive Money, a not-for-profit advocacy group. Owning a rental property for a decade in those areas would deliver between £100,000 and £131,000 in capital gains, which is taxed at lower rates than income.

“It’s difficult to miss the news stories of landlords complaining they are under the pump at the moment because of rising interest rates and, most absurdly, the government’s forthcoming renters’ reform bill,” said Tom Darling, a campaign manager at the Renters’ Reform Coalition. “[But] landlords have seen a vast expansion of their wealth over the last 30 years.”

But the windfalls are only available if landlords sell up, and those who continue to operate claim that incoming reforms protecting tenants from no-fault evictions and rising interest rates will squeeze their margins.

Chris Norris, policy director at the National Residential Landlords Association, said: “Landlord profits are at their lowest levels since 2007, a clear sign that they are not ‘cashing in’ on the cost of living crisis. What the country needs is a plan of action that recognises the need for more homes of every kind, whether they be properties for private rent, social rent or owner occupation.”

The geographic spread of capital gains is uneven. A typical landlord in the north-east of England has gained £12,000 per home in the last decade, compared with £40,000 in the north-west and £71,000 in the south-west, according to the estimates.

Meanwhile, in the last 30 years the number of households renting in England and Wales has more than doubled to 5m (one in five), census results show.

Amid rising interest rates and expiring fixed-term mortgages, last week the Bank of England forecast that average monthly payments on buy-to-let mortgages would increase by about £275 by the end of 2025.

Asking rents for new lets in London, Cardiff, Aberdeen, Southampton, Glasgow, Manchester and Edinburgh are all at least 10% up on last year, according to the property website Zoopla. Average London rent has increased by £490 a month to £2,001.

Across the UK, all private rents – including those paid by sitting tenants – rose by 4.9% in the 12 months to March 2023, according to the ONS.