Rents across the UK are set to increase sharply over the next five years, as more people choose to rent, rather than buy property, partly as a result of uncertainty around Brexit, according to Savills.
The estate agency forecasts that rents will rise by 19% between now and 2021, while home purchase prices will only increase by 13%.
Average rents are expected to rise by 24.5% in London by the end of 2021 – mainly because the cost of buying property in the city is so expensive.
Upward pressure on rental prices looks set to be caused by would-be first-time buyers being forced to rent as housing market conditions get tougher, while recent tax changes deter many buy-to-let landlords from investing further in the private rented sector, which would suppress the levels of homes in the PRS, according to Savills’ predictions.
While rents look set to rise, Savills expects home price growth to be largely flat over the next two years as Brexit negotiations leave home buyer sentiment “fragile”.
The research follows a Nationwide report that residential property prices in the UK had ended a 15-month growth run in October amid Brexit uncertainty. The mortgage lender said the average UK house price was unchanged in October when compared to September.
Savills predicts UK house prices to be flat on average in 2017, grow by 2% in 2018, by 5.5% in 2019, by 3% in 2020 and by 2% in 2021. Over the five years, house prices will grow by 13.1%.
Lucian Cook, Savills UK head of residential research, said: “Brexit has forced the market to change gear and created uncertainty.
“The period of negotiation with the EU is likely to be a rollercoaster of confidence.
“Buyer sentiment across all sectors of the market is likely to be fragile during the period of negotiations to leave the EU.”
|Five year total||+19%|