Rent prices in the UK set to soar 15% by 2023

Rent prices in the UK set to soar 15% by 2023

Thursday, August 9, 2018

Rent prices are predicted to rocket 15% over the next five years as the supply of new property onto the market continues to dry up while demand increases.

A survey carried out by the Royal Institution of Chartered Surveyors (RICS) showed 22% more respondents reporting a fall in new landlord instructions in the last three months.

Rents are projected to increase by a little short of 2% nationally over the next 12 months.

However, RICS said the longer term outlook will see a mammoth 15% added to rents by 2023.

The organisation said the figures reflect the shift in the Buy to Let market following tax changes, resulting in smaller-scale landlords exiting the sector.

"The shortfall in supply over the medium term is expected to force a cumulative rise of around 15% by the middle of 2023," it said.

East Anglia and the South West are expected to see the sharpest growth over the period.

RICS chief economist Simon Rubinsohn added: "The impact of recent and ongoing tax changes is clearly having a material impact on the Buy to Let sector as intended.

"The risk, as we have highlighted previously, is that a reduced pipeline of supply will gradually feed through into higher rents in the absence of either a significant uplift in the Build to Rent programme or government funded social housing.

"At the present time, there is little evidence that either is likely to make up the shortfall.

"This augurs ill for those many households for whom owner occupation is either out of reach financially or just not a suitable tenure."


Why are rents increasing?

Last year, the Conservative party introduced a new tax system for buy-to-let landlords. They used to be able to deduct the cost of their mortgage interest before calculating their tax liability for rental properties.

Now, the interest is included and they are granted a 20% credit towards the cost, meaning they pay more.

Some landlords have chosen to sell their properties because they’re no longer profitable after the changes.

Research conducted by Capital Economics for the National Landlords’ Association found that 20% of landlords were planning on selling properties within the next year.