A combination of post-Brexit economic revival, unattainable prices for home buyers and landlords seeking to recoup income lost to stamp duty and lower tax relief will push up rental prices across the UK, according to new research.
UK rents will increase by an average of 11.5 per cent by 2023, says one major report, while London rents will enjoy even higher returns, rising by 15.9 per cent.
There will be a shift in the make-up of landlords, the report added, with ‘accidental’ and buy-to-let landlords reducing in numbers, while cash investors take their place.
“We expect cash investors to become increasingly dominant, especially in Central London, while history suggests international investors will become more active as uncertainty clears, particularly if they can play the currency card,’ said Lucian Cook, who oversaw the research.
Renting has become ever more commonplace, as deposits needed for purchase rise out of the reach of younger buyers. Continuing economic uncertainty, even if Brexit is resolved, will dissuade young people from taking on large mortgages.
“The private rented sector will play a more important economic role than ever as it provides flexibility and value to renters and landlords alike,” said buy-to-let expert John Goodall.
The build-to-rent sector, which has emerged as a strong new trend in UK real estate, will continue to win custom, experts believe. Regeneration zones in places such as Elephant and Castle and Hayes in South London will become hubs for large build-to-rent developments, charging above market rents compared with period stock, but offering a wealth of facilities including cinema and games rooms and roof terraces.