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.