The Royal Institution of Chartered Surveyors (RICS) predicts that UK rents will jump by 15 per cent over the next five years, thanks to dwindling supply and rising demand.
Its survey of residential property market conditions shows that tax changes have restricted the number of buy-to-let landlords, including an additional 3 per cent on second homes and the loss of tax breaks. At the same time, more people are entering the rental market, since they cannot afford to buy their own homes.
Without a significant increase in the build-to-rent sector, or government-funded social housing, “a reduced pipeline of supply will gradually feed through into higher rents,” said Simon Rubinsohn, chief RICS economist. “There is little evidence that either is likely to make up the shortfall.”
Rising interest rates and uncertainty related to Brexit have slowed the sales market, according to the RICS survey, which showed flat transaction levels across much of the country, although outside London and the south of England there are signs of increased activity.
The survey identified East Anglia and the south-west of England as regions where increases in rental values may be highest. In London, average monthly rents rose by 3.3 per cent in the year to July 2018, reaching £1,615 compared with a 1 per cent rose across the rest of the UK, to £777.