15% Rental Rate Rise Predicted By 2023
The rental market in the UK has seen its fair share of changes over the last two years and it is now looking like those changes are starting to have an impact.
The Royal Institution of Chartered Surveyors (RICS) recently conducted a survey which provided some interesting forecasts for the Private Rented Sector.
It appears that the supply of homes available for rent has taken a fall and has done consistently for the past 2 years. Changes to tax law for landlords and an increase in stamp duty for buy-to-let purchases has made potential new landlords more hesitant to jump into the market.
RICS found that across the last 3 months 22% of respondents to the survey saw a drop in new landlords. This combined with the growing demand for rental homes due to affordability issues has led to forecasts of a 2% rise in rental rates over the course of the next year.
This increase is expected to be felt in all regions of the UK, with East Anglia and the South-West of England highlighted to see the largest growth.
Long-term, this is predicted to continue also, with the pressures of the UK property market predicted to drive rents up by 15% over the next 5 years.
A separate report from tenant referencing company HomeLet, stated that rents had risen by 1% in the 12 months to July, currently standing at an average of £777 per month, with London seeing a 3.3% rise to £1,615 in the same period.
Chief Economist at RICS – Simon Rubinsohn – commented on the findings of their survey, stating “The impact of recent and ongoing tax changes is clearly having a material impact on the buy-to-let sector as intended.
“The risk, as we have highlighted previously, is that a reduced pipeline of supply will gradually feed through into higher rents in the absence of either a significant uplift in the Build to Rent programme or government-funded social housing.
“At the present time, there is little evidence that either is likely to make up the shortfall.”