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Rental Value Growth Projected to Outpace Property Prices by 2022

Rents are expected to grow faster than house prices over the next five years, according to a new survey – as demand continues to outstrip the supply in the market.

Property Investment Market UK

Rents are expected to grow faster than house prices over the next five years, according to a new survey – as demand continues to outstrip the supply in the market.

Predicting an increase of just over 25% in the next five years, the Royal Institute of Chartered Surveyors (RICS) believes that rent inflation is going to outpace house price growth, which is projected to experience less than a 20% rise.

 

While rents are due to see positive growth in the coming years, the challenges brought upon landlords through changes in taxation are beginning to have an impact, said RICS.


The number of new rental listings in the UK grew marginally in January, marking a fourth consecutive month of minimal growth, according to the organisation.


The report highlighted a net balance of 28% of respondents claiming that their landlords are considering reducing the size of their portfolios in the next 12 months, due mainly to the changes in Stamp Duty last year and the upcoming cuts of mortgage interest tax relief.

 

While supply is tightening in the market, the demand for rental properties continued to increase in the three months to January, contributing to the trend of rising rents.

 

In the housing sales market, a headline balance of 25% of surveyors reported a rise in house prices, with the North West experiencing the highest net balance for the third consecutive month.

 

However, only a net balance of 5% of the RICS members reported an increase in demand from homebuyers, which is the lowest reading since August 2016 and new stock in the housing market remained close to historic lows.

 

Commenting on the survey, Jeremy Blackburn, the head of UK policy at RICS, said:

 

‘(...) we need to stop punitive measures against our bedrock small landlords. The detail on the ban on lettings 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.’

 

The survey was released before the publication of the Government’s Housing White Paper, where they outlined measures to tackle the housing crisis and put the private rental market in focus.

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