RICS: Rent rises will outstrip house prices over the next five years
Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, comments on the publication of the RICS UK Residential Market Survey, showing rent rises will outstrip house prices over the next five years.
Key points from publication:
- Over the next five years rents are expected to grow faster than house prices (5% for rents and 4% for prices).
- Rental costs are set to keep rising, as tenant demand keeps increasing and the number of rental properties continues to fall.
- Meanwhile, in the sales market, new buyer enquiries fell, sales agreed were flat, but a shortage of properties for sale continued to squeeze prices higher.
Sarah Coles says:
“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.
“It leaves renters in a horrible position. They already spend a significantly larger chunk of their income on housing costs than their home-owning counterparts, and runaway rising bills from energy to petrol and food means they can’t afford to pay more to rent their current home. More and more are being forced to move, which is horrendously expensive in itself.
“Their new homes are likely to be smaller, and there’s been a growth in people renting a single room in a larger property to cut costs. Right now, we’re not seeing a boom in sofa surfing and a return to living with parents, but the agents think this isn’t out of the question.
“Meanwhile, for buyers and sellers, property prices kept rising in May. However, there were plenty of reports of buyers taking their time and considering their purchases more carefully. As a result, more sales were falling through, and in some cases, when the property went back on the market it fetched a lower price. One agent commented that the party is nearly over.”
Kindly shared by Hargreaves Lansdown
Main article photo courtesy of Pixabay
