UK rents will rise faster than house prices over the next few years, bringing yet more misery to the country’s private tenants, according to a recent survey by the Royal Institution of Chartered Surveyors (RICS).
The organisation has predicted that rents will rise by more than 25% in the coming years, while house prices are set to grow by less than 20%.
Rents to Rise Faster than House Prices Over the Next Few Years
In the three months to January, tenant demand continued to increase, the RICS study found. With landlords expected to scale back their portfolios over the next 12 months, renters will have fewer properties to choose from, which is likely to push rents even higher.
RICS claims there was a lack of new listings coming onto the lettings market for the fourth quarter in a row, and its members expect this to worsen.
The past few months have seen a number of buy-to-let landlords sell up, including the country’s most notorious investor, Fergus Wilson, who insisted that the age of the small-scale landlord is over, following the Stamp Duty increase last year and other forthcoming tax changes, along with stricter lending criteria.
The RICS survey was conducted before the release of the Government’s Housing White Paper on Tuesday, which promised measures to help private developers build large-volume rental homes for tenants and more long-term tenancies. Tenant lobby group Generation Rent criticised the fact that these were limited to new, purpose-built rental accommodation, arguing that renters on stagnant wages need homes costing no more than a third of their income.
However, the Head of UK Policy at RICS, Jeremy Blackburn, says ministers have listened to the organisation, and stresses that the fledgling Build to Rent sector needs a “turbo-boost”.
He adds: “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.”
According to the RICS survey, a net balance of 25% of surveyors reported rising house prices in January. Property values are expected to continue their upward trend across the UK over the next 12 months, except in London, where they are forecast to fall. North West and South West England and Northern Ireland are seeing stronger growth, however.
Nevertheless, supply and demand are stagnant, the organisation claims. RICS reports that the number of properties for sale across the country remained close to historic lows, while a net balance of 5% of surveyors reported an increase in demand from homebuyers – the lowest level since last August.
Brian Murphy, the Head of Lending at the Mortgage Advice Bureau, believes that rent rises in many areas over coming months are “potentially a good outcome for landlords who are staying in the buy-to-let game, but not so great for tenants in the private rented sector”.
The Managing Director of The Deposit Protection Service (DPS), Julian Foster, also comments on the survey: “A diverse rental sector that suits differing ages, lifestyles and pay-packets is vital to creating housing choices that work for everyone, whether they are hoping to buy one day or are happy renting long-term.
“When there are too few homes, people are denied real options over where they live, and the strain created in the market can lead to expensive house prices and soaring rents.
“The Government’s recent Housing White Paper quite rightly recognised the importance of the private rented sector in the housing market and, by encouraging the construction of property for rent or ownership, we can alleviate the burden and allow more people to find a home where they can be happy.”
Earlier this year, a survey of tenants by The DPS found that around two out of five renters did not expect to buy their own home in the near future.