RICS: Rent rises to outstrip house prices in next five years

14 June 2022

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Over the next five years rents are expected to grow faster than house prices according to surveyors.

Rents are expected to rise by 5% compared to 4% for house prices, as detailed in the Residential Market Survey from the Royal Institution of Chartered Surveyors (RICS).

Surveyors expect rental costs to go up due to rising tenant demand and the lack of available properties in the private rented sector.

Meanwhile in the sales market new buyer enquiries have been flattening, though prices have been upheld thanks to a shortage of properties for sale.

Sarah Coles, senior personal finance analyst, Hargreaves Lansdown, said: “Rocketing rents are already putting tenants under horrible pressure, and there’s every sign that the squeeze is going to intensify. Rent rises are expected to outstrip house prices over the next five years, as landlords sell up and tenant numbers boom.

“Landlords are packing up and clearing out of the market. Some feel we’ve reached the top of the market and are keen to capitalise on higher prices while they can. Others are worried about more legislation and higher taxes making renting less rewarding. In London in particular, some are moving into the Airbnb market where returns are more rewarding.

“Those landlords who are left, are in a position of real power, because the number of people looking to rent continues to rise. Rising house prices mean more people renting later in life, which in turn means tenant numbers are booming. In recent months, they’ve been joined by people who’ve sold up and are being forced to rent because they can’t find anything to buy.

“With several potential tenants chasing each home, landlords are hiking rents and being pickier about who they accept. Tenants are keen to stay put to avoid the cost of moving and higher rents elsewhere, but some are being forced out by higher rents or landlords selling up.”

Emma Cox, managing director of real estate at Shawbrook, reckons rents will rise in the next few months.

She said: “In the lettings market, there is still strong demand from tenants for a constrained supply of high-quality rental properties. Over the coming months, rents across the UK could well be subject to further upward pressure.

“With so many complex factors weighing on the sector, lenders are continuing to support homebuyers and landlords with competitive rates and favourable LTVs. Many are looking to secure mortgage deals now, in anticipation of future Bank of England decisions.

“Supply remains one of the key themes highlighted by surveyors. Further clarity is needed from the government on how it intends to support landlords and homeowners, and particularly those looking to make energy efficiency upgrades to older stock”.



Source: Property Investor Post

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Lewis Finn

Experienced Sales Manager with a demonstrated history of working in the financial services industry. Specialising in offshore investments & UK investment property.

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