UK rents expected to rise faster than house prices

Royal Institute of Chartered Surveyors predict rental prices to rise faster than house prices over next five years.

Sharp rent rises may be on the horizon, after tax changes which could reduce the properties they have on their books, according to the Royal Institute of Chartered Surveyors (Rics).

The surveyors suggest that this would be the result of more tenants chasing fewer rental properties.

The stamp duty and other tax changes have affected the buy-to-let sector. In the last few months, a number of buy-to-let investors have sold up, including Britain’s biggest landlord, Fergus Wilson and his wife, Judith. They declared that the days of small buy-to-let landlords were numbered following the stamp duty increase and tougher mortgage rules.

The Royal Institution of Chartered Surveyors has predicted that rents will increase by just over 25% in the coming years, while property values are set to grow by less than 20%.

The survey suggests that landlords will be scaling back their portfolios in the next 12 months, and so tenants will have fewer properties to choose from, leading to higher costs of rent.

Rics said that for the fourth quarter in a row, there was a lack of new listings coming on the letting market, and its members expect this to worsen.

The survey was conducted before the release of the government’s housing white paper, which promised encouragement for private developers to build large-volume rental flats for tenants, and more long-term “family friendly” tenancies.  This was criticised by Generation Rent, who said that these were limited to new purpose-built private rented homes and said renters on stagnant wages needed homes costing no more than one-third of their income.

Jeremy Blackburn, head of UK policy at Rics said that concerns over the build-to-rent sector had been discussed with ministers, stressing that the sector needed a “turbo boost”.

He said: “At the same time, we need to stop punitive measures against our bedrock small landlords. The detail on the ban on letting agent fees is yet to come, and along with any overt forcing of longer tenancies, [it] could dampen investment in buy to let overall. The government must be careful about signalling both stop and go at the same time.”

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