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UK property rents to rise 15% by 2023?

Falling levels of supply could increase pressure on the market, with calls for rental market reforms such as more investment into the purpose-built rental sector.

Summary:

  • The number of new rental properties coming onto the market in the UK is falling
  • A new survey from the Royal Institute of Chartered Surveyors has found a reduction in the number of private landlords in the country’s traditional buy-to-let sector
  • Industry commentators have called for ways to encourage investment and greater levels of quality in the rental sector

Are UK rental prices about to surge once again?

New research from the Royal Institute of Chartered Surveyors (RICS) has found that supply levels in the rental sector have steadily been falling over the last two years.

The result is that rental prices in the UK could rise by as much as 15% by 2023.

According to RICS, it has seen a significant reduction in the number of private landlords who once operated small portfolios of traditional buy-to-let property. New tax changes implemented by the UK government in 2017 is starting to make buy-to-let property less profitable for private landlords – with many investors seemingly leaving this sector of the rental market.

Explaining these tax changes, a spokesperson from the Treasury said: “We want to realise the dream of homeownership for a new generation, and that’s why we introduced a cut to stamp duty for first-time buyers.”

But while this is good news for potential homeowners, RICS believes that more needs to be done for a rising generation of Britons that are actively choosing to rent their homes rather than owning them.

Abdul Choudhury, Policy Manager at RICS, has called on the government to do more to raise standards in the purpose-built rental sector, particularly in cities such as Manchester where demand for this type of property is highest.

Mr Choudhury said: “Withdrawing tax breaks that small landlords relied on, placing an extra 3% on second home stamp duty, and failing to stimulate the corporate build-to-rent market, has understandably [had an impact on] supply.

“The government must urgently look again at the private rented sector as a whole, including ways to encourage good landlords.”

Source: Select Property