Rents set to rise across UK despite falls in London and South East
Tuesday 14 March 2017
Rents are predicted to rise by 18 per cent over the next five years as the number of new landlord instructions continues to fall, according to the Royal Institution of Chartered Surveyors (RICS).
Their most recent monthly residential property market survey found that the number of landlord instructions dropped by 10 per cent, the poorest results in over two years.
Changes to mortgage interest tax relief from next month have hit investment levels in the BTL sector, and RICS estimate that this trend will continue for the foreseeable future.
As new housing supply in the private rented sector falls, demand is expected to increase as the imbalance drives rents up.
Stephen Wasserman, managing director of West One Loans, said: “The persistent supply versus demand challenge plagues the property market, with landlords looking to capitalise on strong demand having to overcome sustained supply-side issues.
“The changes to BTL taxation are likely encouraging some to put the brakes on their investments but, with many hungry renters, landlords shouldn’t walk away completely.”
Nationally rents fell 0.6 per cent over the last year to £921pcm last month, down £5 compared with February 2016, Countrywide’s latest Lettings Index shows.
In London and the South East annual rents fell by 4.7 per cent and 2.6 per cent, respectively, as a flood of new rental homes came on to the market and pushed demand down.
Increased tenant demand has meant that rents rose across all other parts of Great Britain, led by gains in the East and West Midlands.
If London was excluded, Countrywide’s figures reveal that rents rose by an average of 0.8 per cent year-on-year.
Johnny Morris, research director at Countrywide, said: “Early signs point towards 2017 being a rare year where rents rise faster in the north of the country than in the south.
“While rents are likely to track any increase in earnings, affordability in London and the South East remains stretched. That is likely to limit rental growth.”
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