A shortage of supply in the private rental sector will push rent prices up by an average of almost 14% (13.7%) over the next five years, according to a claim by Savills.
The estate agent suggests that the lack of properties on the lettings market is a sign of the increasing number of buy-to-let landlords leaving the sector due to more stringent tax rules.
Tighter access to mortgage finance and limited social housing supply will continue to fuel tenant demand for private rental properties at all price points, Savills believes.
This is particularly true in London, where the firm expects rents to rise by 15.9% by 2023.
However, while tenant demand remains strong, buy-to-let purchase numbers will almost certainly continue to come under pressure, adding to the widening supply-demand imbalance in the lettings market.
Savills predicts that mortgaged buy-to-let purchases will fall by almost a quarter (23%) by the end of 2023.
Lucian Cook, the Head of Residential Research at Savills, says: “This will add to upwards pressure on rents, particularly in London, as investors look to lower value, higher yielding markets.”
The firm also forecasts that house prices will increase by an average of 14.8% in the next five years, ranging from growth of 21.6% in the North West, to single-digit rises in London and the south.
Property values in the capital’s prime market will perform much more strongly, Savills reports, given the price adjustments already seen in London since 2014.
But, according to Cook, transactions, rather than house prices, are often seen as the ultimate measure of market strength.
“Sales volumes have fallen only 6.9% since the Brexit vote, to 1.145m, demonstrating the resilience of the UK housing market,” he adds.
Landlords, if you decide to remain in the lettings sector, you should plan to protect your rental income against tenant rent arrears with specialist cover.
We provide essential Rent Guarantee Insurance to give you the peace of mind that you need in times of rent price growth and market instability. Cover is available instantly online here: https://www.justlandlords.co.uk/rentguaranteeinsurance