Next five years may see rent increases overtaking house prices

February 15, 2017 by Brendan

Property Market

According to a survey by the Royal Institution of Chartered Surveyors (RICS), rents may increase much faster than property prices during the next five years, as landlords reduce the number of properties on their books.

As demand outstrips supply, the cost of rent is expected to increase at a much faster rate than the price of houses. Surveyors believe that house prices will rise by 20% during the coming five years, but rents will increase by 25%. More surveyors also believe that buy to let landlords are more likely to reduce their property portfolio during the next year, rather than increase them. As this will result in greater demand for fewer properties, rents could increase even further.

Due to the introduction of new tax rules and the new Stamp Duty regulations, rental income has become a less attractive investment option for buy to let landlords. However, the survey was conducted before the government’s white paper was released, which outlined its aim to boost the rental sector. The plans include the offering of more family friendly lettings, which are long term, and making it easier for developers to build affordable rental properties.

According to the head of policy at the RICS, Jeremy Blackburn, ministers had taken into account the views of RICS, to provide a boost to the rental sector’s supply.

Buying a home may be the sensible option if you believe you may end up paying more in rent. However, seeking advice from a mortgage adviser who has studied on a CeMAP course will help to keep mortgage payments low.