Rents predicted to soar 15% over next five years
Rents are set to surge by 15% over the next five years, as a shortage of properties pushes up prices, the Royal Institution of Chartered Surveyors (RICS) has predicted.
The reduction of new property coming to the market last month was the most striking aspect of the market, with 22% more surveyors noting a fall rather than a rise in new landlord instructions.
It is the eighth consecutive month of declining supply.
The shortfall will have a limited impact in the short term, raising rents by around 2% nationally, but by 2023 there will be a significant increase in costs for tenants, according to RICS.
All parts of the country
The body blamed buy-to-let tax changes for pushing small landlords out of the market and said the fall in instructions was “evident in virtually all parts of the country”.
At the same time, more tenants are looking for a home, the survey showed.
East Anglia and the South West are likely to see the sharpest rental growth, RICS forecast.
Simon Rubinsohn, RICS chief economist, said: “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.
“This augers ill for those many households for whom owner occupation is either out of reach financially or just not a suitable tenure.”
Sales steady with regional differences
In the sales market, prices edged up with surveyors suggesting a stronger market in Scotland, Northern Ireland, the north of England, the Midlands and Wales.
However, in London 40% more surveyors noted a fall in prices.
In the South East and East Anglia responses suggested small price falls, RICS said.
The average inventory on the books of estate agents is likely to remain close to historic lows, the trade body suggested.
Alex Depledge, chief executive at Resi.co.uk, added: “Another stagnant month will come as no surprise to owners looking to move up the housing ladder.
“Lack of supply and affordability remain a lasting problem for those looking to upsize, creating delays in property chains that means moving, whatever your means, can seem out of reach.”