Property investors can expect rents to see higher growth than house prices over the next five years according to new predictions from The Royal Institution of Chartered Surveyors, suggesting a changing climate in the property market.
However, across the country, investors should anticipate strong price increase. Property prices are expected to rise over the next 3 and 12 months in all regions bar Central London. Current areas to look out for are the North West, South West and Northern Ireland.
Rents are projected to rise by 25 per cent over the next five years in comparison to house prices, which should see growth of just 20 per cent. This has been attributed to the changes to mortgage interest relief and stamp duty, which could lead to many landlords reducing their portfolios, with the resulting limited supply bolstering rents.
The research had been conducted prior to the release of the Government’s housing white paper this week, which outlined Government plans to solve the housing crisis by changing policy regarding the rental sector. This is set to be done by amending planning rules for councils to plan for Build to Rent homes and offer more affordable rents. Plans have also been laid out to ensure tenants have access to longer term tenancies in the private rental sector.
RICS head of UK policy, Jeremy Blackburn, said the Government had taken account of RICS research with regards to prioritising the private rental sector to improve housing supply matters. He said: ‘Our survey demonstrates how vital greater supply is in this sector; we really need to turbo boost Build to Rent. The consultation on how to do this must be used as a defining moment.”
RICS chief economist, Simon Rubinsohn, said: ‘The scale of the challenge Government faces as it announces its new approach to housing is clearly demonstrated in the results from our latest survey. Not only are the headline price and rent series pointing to further increases over the course of this year, but more significantly, the medium term view of RICS professionals working up and down the country is that both house prices and rents will over the medium term continue to grow at a faster pace than wages putting even greater pressure on affordability. Whether the measures announced can ease this this trend remains to be seen.’