The average rental rate in the UK is expected to increase faster than the average house price.
According to a recent survey by the Royal Institution of Chartered Surveyors (RICS), the cost of renting a property is expected to rise by 3% a year over the next five years. On the other hand, property values are predicted to rise by 2% per annum.
The results come from a survey of RICS members who were asked to make predictions about the condition of the UK property market.
Why is this happening?
Demand for rental properties has continued to rise over recent years with the number expected to rise to 20% by 2020.
However, due to a number of recent tax changes, many are predicting that landlords may consider selling their less profitable properties and leaving the sector, which could lead to demand outstripping supply, which will push rental rates up.
RICS UK Commercial Property Director, Paul Bagust said: “A functioning private rented sector is crucial to a healthy housing market and it’s predicted that over 20% of all households will be PRS by 2020. The sector is extremely diverse, including many one home landlords.
“RICS is part of a sector-wide collaboration developing a revised industry-led PRS Code of Practice, to raise standards for both consumers and landlords, bring clarity to those already in the market on various policy measures, and encourage landlords back into a professionalised market.”
It isn’t all doom and gloom, as this presents an opportunity for first-time buyers, who will no longer need to compete with prospective landlords when it comes to buying property.
