UK rents expected to rise faster than house prices in next five years

Rics survey heaps further misery on Britain’s growing army of renters, who will likely have fewer properties to choose from

UK rents are expected to rise faster than house prices over the next five years, bringing further misery to Britain’s growing army of renters, according to a survey. The Royal Institution of Chartered Surveyors has predicted that rents will increase by just over 25% in the coming years, while property values are set to grow by less than 20%.

In the three months to January, tenant demand for rental properties continued to go up. With landlords expected to scale back their portfolios in the next 12 months, tenants will have fewer properties to choose from, which is likely to push rents higher, the survey suggests.

Rics said there was a lack of new listings coming on to the lettings market for the fourth quarter in a row and its members expect this to worsen. 

The past few months have seen a number of buy-to-let investors sell up, including Britain’s biggest landlord, Fergus Wilson and his wife, Judith, who declared that the days of small buy-to-let landlords were numbered after the stamp duty increase last year and other tax changes, along with tougher mortgage rules.

The Rics survey was conducted before the release of the government’s housing white paper on Tuesday, which promised encouragement for private developers to build large-volume rental flats for tenants, and more long-term “family friendly” tenancies. Campaign group Generation Rent criticised the fact that these were limited to new purpose-built private rented homes and said renters on stagnant wages needed homes costing no more than one-third of their income.

But Jeremy Blackburn, the head of UK policy at Rics, said ministers had listened to the organisation and stressed that the fledgling build-to-rent sector needed a “turbo-boost”. “At the same time, we need to stop punitive measures against our bedrock small landlords. The detail on the ban on letting agent fees is yet to come, and along with any overt forcing of longer tenancies, [it] could dampen investment in buy to let overall. The government must be careful about signalling both stop and go at the same time,” he said.

According to the Rics survey, a net balance of 25% of surveyors reported rising house prices in January. Property values are expected to continue their upward trend 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.

Supply and demand are stagnant. Rics said the number of properties for sale across the country remained close to historic lows, while a net balance of 5% of surveyors reported an increase in demand from homebuyers, the lowest reading since last August.

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 buy-to-let game, but not so great for tenants in the private rented sector”.


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