According to the Royal Institution of Chartered Surveyors (RICS), rent could soar by 20% or more during the coming five years, as more landlords exit the buy-to-let sector following tax changes.
The organisation warned that the demand for rental properties had continued to exceed the supply for the last 38 months to February 2017. As the shortage of rental properties continues to rise, the cost of rent may be pushed even higher.
Although this trend looks as though it will continue, according to the group, house price growth is expected to continue to increase, but at a slower rate of 18% during the same period. As landlords face the new tax changes which will make the rental sector more expensive, some have decided to leave the buy-to-let. The affordability criteria for landlords has also become much tougher, which has made it harder for new landlords to enter the sector.
As more people have postponed buying a home, due to Brexit and rising house prices, there are more wanting to rent a property. Rising rents are also bad news for those who want to buy their own home, as saving for a deposit will be much harder. Lower income households will also be hit by the increase in rent.
The changes in the rental sector include mortgage interest tax relief and a 3% surcharge in stamp duty land tax. Around 19% of landlords have stated that they will be increasing rents to cover the extra costs incurred.
First time buyers may want to seek the advice of a CeMAP qualified mortgage adviser to find a low interest rate mortgage deal if they are struggling to save a large deposit.
