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Rents to rise by 4% in next 12 months

Rents are set to increase by a further 4% in the next 12 months, a report by RICS has predicted.

This is due to the high level of interest on mortgages, making it virtually impossible for first-time buyers to get on the housing ladder, resulting in more turning to the rental market.

This also comes at a time when the market is witnessing an exodus of landlords, resulting in a lack of stock which is pushing up the prices.

David Hannah, group chairman at Cornerstone Tax, said: “Rent prices are going up because landlords’ costs, particularly as a result of rising interest rates, are increasing.

“However, this is not the whole picture as there is still a chronic undersupply of housing in the UK in popular locations.

“For example, rent rises in London post pandemic have been as much driven by a lack of available properties as they have been by inflationary pressure.

“The situation has been particularly exacerbated for houses in multiple occupation (HMO) – these are landlords who typically include the costs of energy, heating, and other bills into the rent.

“The soaring increase in energy costs has as a result had to be factored into the rent for these types of properties. Accordingly, rent rises in these types of lets exceed inflation by a considerable margin.”

As well as soaring mortgage prices landlords are now faced with the government’s costly new EPC targets, which will force landlords to upgrade the energy efficiency of their buy-to-let properties to a rating of ‘C’ in 5 years, which is set to come at a considerable cost or face fines of up to £30,000.

The long-debated Renters Reform Bill is also still being considered by the government, which contains radical plans for the housing industry.

Hannah added: “In terms of the rental reforms being considered, I am in favour of rogue landlords being driven out of the markets, but there are also good landlords who have bad tenants that need to be considered.

“The most important thing is to balance tenant rights against tenant obligations and ensure that landlords keep some of their authority.

“There are cases in which properties have been damaged and tenants refuse to let their landlord inspect the home, or where rent has not been paid for a considerable period of time, for example.

“I welcome the proposed changes of the renting rules, and agree tenants need protection, but landlords ultimately need rights too.

“Our study shows that landlords do need help alongside tenants as nearly 1 in 4 say their biggest mental health strain is managing their tenants.”