Rents set to surge by nearly 14 per cent by 2023
A shortage of housing supply will cause rents to surge by an average of 13.7 per cent over the next five years, an estate agency has claimed.
Growing numbers of buy-to-let landlords exiting the rental market due to more stringent tax rules have contributed to a lack of properties on the market, says Savills.
But it warned that tightening access to mortgage finance and limited social housing supply will continue to fuel demand for privately rented homes at all price points.
This is particularly true in London, where Savills forecasts rents will rise by 15.9 per cent over the same period.
But while tenant demand remains strong, buy-to-let buyer numbers will almost certainly continue to come under pressure, adding to the widening supply-demand imbalance.
Savills predicts that mortgaged buy-to-let purchases will drop by almost a quarter - 23 per cent- by the end of 2023.
Lucian Cook, head of residential research at Savills, said: “This will add to upwards pressure on rents, particularly in London, as investors look to lower value, higher yielding markets."
The firm also projects that home purchase prices will increase by an average of 14.8 per cent, ranging from 21.6 per cent in the North West to single digit growth in London and the South.
Values in the capital’s prime market will perform much more strongly, given price adjustments already seen in the capital since 2014.
But transactions, rather than house prices, are often seen as the ultimate measure of market strength, according to Cook.
He added: “Sales volumes have fallen only -6.9 per cent since the Brexit vote to 1.145 million, demonstrating the resilience of the UK housing market.”
Richard Truman, Head of Operations at Simple Landlords Insurance, added: “A rise in demand from tenants is in general good news for landlords – especially those taking advantage of new market conditions, and looking to grow.
“There are opportunities to buy up bargain stock, and to expand investment interests to include developments – meeting that growing demand. By thinking outside the box, savvy landlords can stay ahead of the curve.”
Find out more about how landlords are changing with the times in Simple Landlords’ Emerging Landlord report.