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Rents will outpace house price rises

Friday 10 February 2017

UK rents are set to rise faster than house prices over the next five years, a survey by the Royal Institution of Chartered Surveyors (RICS) suggests. 

Rents will increase by just over 25 per cent in the coming years, while property values are predicted to grow by less than 20 per cent.

In the three months to January, tenant demand for rental properties continued to rise. 

And if landlords scale back their portfolios in the next year, following a series of government-backed attacks on the BTL industry, tenants will have fewer properties to choose from, which will in turn serve to push rents higher, the survey suggests.

The Rics survey was conducted before the release of the government’s housing white paper on Tuesday, which pledged support for private developers to build large-volume rental flats for tenants, and more long-term “family friendly” tenancies. 

Jeremy Blackburn, the head of UK policy at Rics, argued the government should stop “punitive measures against our bedrock small landlords.” 

He said: “The detail on the ban on letting agent fees is yet to come, and along with any overt forcing of longer tenancies, this could dampen investment in buy to let overall. 

“The government must be careful about signalling both stop and go at the same time.”

According to the Rics survey, property values are expected to continue growing across the UK over the next 12 months, except in London, where they are expected to fall further. 

North-west and south-west England and Northern Ireland are seeing strong growth.

Brian Murphy, the head of lending at the Mortgage Advice Bureau, said rent increases in many areas over coming months were “potentially a good outcome for landlords who are staying in the BTL game.”

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