Rents in UK set to rise by 15% over next three years, agents suggest
Rents in England are set to rise by 15% over the next three years but the amounts will vary from region to region, according to a new forecast.
Agents are predicting that rents are likely to rise faster than house prices as landlords find ways of coping with extra costs due to ta changes, tougher lending criteria and stamp duty charges.
The rent rises are also likely to be affected by a lack of homes in the private rented sector, according to the predictions from Belvoir which has a network of 300 franchised offices across the country.
The firm’s latest index covering the third quarter of 2016 shows that 88% of offices reported an increase in demand for houses to rent. Research shows that 86% of tenants, who make up about six million households, had less than the £8,838 needed for a 5% deposit on the average home and are therefore unlikely to be able to buy a property.
‘People from all walks of life, including students, migrant workers and professionals with families, are struggling to meet stringent lender affordability ratios. When someone is not in a position to buy, they obviously start looking for somewhere to rent,’ said Dorian Gonsalves, Belvoir’s chief operating officer.
‘But unfortunately, Government policies seem to lack any direction, and have done nothing to benefit either landlords or tenants, so tenants could find it more difficult to find good quality suitable accommodation in 2017 and beyond,’ he pointed out.
When it comes to the banning of letting agent fees Gonsalves explained that the firm has learned a lot from their Scottish offices where tenant fees are already banned. ‘I predict that 2017 will be a year for agents to adapt and change, as the impact of the government’s recent anti-landlord policies take effect and the market readjusts,’ he said.
Gonsalves also pointed out that the predicted rise in rents, which will vary from region to region, is primarily due to a raft of recent anti-landlord Government policies in the past year, which include increasing stamp duty costs, introducing tougher mortgage lending criteria, and removing mortgage tax relief for landlords, which could see many landlords making a loss.
‘In addition, the Government’s failure to increase the availability of social housing for rent has resulted in a real shortage of good quality rental accommodation in the private rental sector,’ he said.
He added that until the details of the ban on letting agent fees in England are revealed it will be very much business as usual with agents looking at ways to ensure that their businesses are in the strongest possible position to enable them to adjust to the changes that lie ahead.
He believes that the Government should look again at some of its policies affecting the private rented sector and either consider reversing them or introducing incentives to help drive up the supply of rental properties. ‘This would then bring down rents and benefit millions of tenants, making for a healthier rental sector,’ he concluded.