The increasing demand for property in the UK continues to outpace supply, which is leading many to predict a rise in rent prices across the nation throughout the year. In fact over half of UK letting agents believe rental costs with increase from April.
One of the major reasons behind the changes is the buy to let Stamp Duty rates that came into play in April 1st. With an extra 3% surcharge being added to each Stamp Duty band potentially adding thousands to the price of a buy to let purchase, landlords could look to pass this increase on to the tenants by increasing the price rent.
Some landlords could be forced out of the buy to let market all together, which will of course mean a decline in the supply of available properties coming onto the rental market. With supply dropping, competition for the limited availability of properties intensifies which will almost certainly cause rents to increase as a result.
In addition to this, the demand for rental properties rose to an average per letting agent branch of 37% in February 2016, which is the highest it’s been since February 2015, as supply increased marginally.
Some 52% of lettings agents reported an uplift in interest from buyers looking to invest in property before the stamp duty reforms came into effect, up from 47% in January.
Following on from the announcement of stamp duty reforms, the need for a private rented sector evolution was highlighted with the emergence of build to rent. Around £50 billion worth of investment in the sector will see build to rent account for 5% of the rental sector by 2020.
