Rent price increases set to outstrip house price growth

Tenants are set to see the cost of renting a home rise faster than their incomes and faster even than house price growth, according to a new report.

People living in private rented accommodation are expected to bear the cost of the tax increases for landlords as they will result in a reduction of properties on the rental market that in turn will push prices higher.

A new report from the Royal Institution of Chartered Surveyors (RICS) forecast that while house prices are thought likely to regain momentum following a short-term dip over the next few months, rents look set to outpace them.

RICS predict that rents in the UK will increase by an average of 4.7% year-on-year for the next five years, compared to house price increases of 4.1%.

The RICS survey is not the only one spelling bad news for tenants.

The latest data from the HomeLet Rental Index reveals that the cost of a new tenancy in the private rentals market in the UK, excluding Greater London, rose by 4.4% in the three months to May 2016 compared with the corresponding period 12 months earlier.

Rental price growth in the UK was led by Scotland, where rents rose by 10.6% year-on-year, followed by gains of 8.3% in the East Midlands. London’s rental market, where the average rent on a new tenancy is now £1,563, up 6.2%, also continues to see rents increase more quickly than in most other areas of the country.

“The May HomeLet Rental Index continues to show a rental market characterised by steady growth in rents, as the number of tenants looking for property runs ahead of the supply in the market – that remains the picture in most regions of the country,” said Martin Totty, chief executive of Barbon Insurance Group, HomeLet’s parent company. 

Want to comment on this story? Our focus is on providing a platform for you to share your insights and views and we welcome contributions.
If any post is considered to victimise, harass, degrade or intimidate an individual or group of individuals, then the post may be deleted and the individual immediately banned from posting in future.
Please help us by reporting comments you consider to be unduly offensive so we can review and take action if necessary. Thank you.