Rents Forecast to Rise Faster Than House Prices During Next Five Years

Rents Forecast to Rise Faster Than House Prices During Next Five Years

09 Feb Rents Forecast to Rise Faster Than House Prices During Next Five Years

Surveyors anticipate rents will increase by just over 25% in the next five years


Rents are expected to increase faster than house prices over the next five years as landlord’s scale back the number of properties on their books, according to a survey the latest Rics survey. The Royal Institution of Chartered Surveyors (Rics) said that rental prices are predicted to overtake house price increases, as a disparity between supply and demand forces rents higher.

Surveyors anticipate that over the coming five years, rents will rise by just over 25% while house prices rise by just under 20%.

Rics also reported that a net balance of 28% more surveyors feel that landlords are likely to decrease rather than increase their portfolios of property over the next year and over a balance of 26% expect landlords to scale back their portfolios over the next three years.

This could mean that rents are pushed higher as tenants would be competing over fewer rental properties.

With a lack of listings coming to the lettings market, this could become a bigger issue in the years ahead as a recent stamp duty hike for landlords and other tax changes diminished the attractiveness of buy-to-let as an investment.

The survey was conducted before the release of the Government’s white paper this week, which included plans to uplift the rental sector, including making it easier for developers to offer affordable private rental homes as well as offering renters a higher volume of long-term “family friendly” tenancies.

Rics head of policy, Jeremy Blackburn said ministers had listened to Rics’ views on giving the private rental sector a higher priority alongside owner-occupation. He felt supply in the market needs a “turbo boost”.

The survey also reported that house prices continued to increase across the UK in January, with a balance of 25% of surveyors reporting prices increasing rather than decreasing.

Over the next 12 months, house prices are expected to continue rising across most parts of the UK, with the exception of London, where expectations have turned slightly negative according to the survey.

In central London, property values have been gradually declining for a number of months, however most other parts of the UK have continued to see prices rise, with the North West and the South West of England and Northern Ireland seeing particularly strong growth.

The number of properties for sale across the country remains close to historic lows, says Rics, though a net balance of 5% of surveyors reported a rise in demand from home buyers rather than a fall.

Chief economist at Rics , Simon Rubinsohn said: “The scale of the challenge the Government faces as it announces its new approach to housing is clearly demonstrated in the results from our latest survey.”

A Department for Communities and Local Government (DCLG) spokeswoman said: “This Government is determined to make housing more affordable and secure for ordinary working families and have a rental market that offers much more choice.

“Measures in our white paper will get more rental homes built and provide more security for renters so that this is a country that works for everyone.”


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