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Rents set to rise by 13.7% by 2023

A shortage of housing supply will push up rents up by an average of 13.7% over the next five years, according to Savills.

The estate agency suggests that the lack of properties on the market is a sign of the growing number of buy-to-let landlords exiting the rental market due to more stringent tax rules.

Tightening access to mortgage finance and limited social housing supply will continue to fuel demand for privately rented homes at all price points. 

This is particularly true in London, where Savills forecasts rents will rise by 15.9% over the same period. 

But while tenant demand remains strong, buy-to-let buyer numbers will almost certainly continue to come under pressure, adding to the widening supply-demand imbalance in the market.

Savills predicts that mortgaged buy-to-let purchases will drop by almost a quarter - 23% - by the end of 2023. 

“This will add to upwards pressure on rents, particularly in London, as investors look to lower value, higher yielding markets,” said Lucian Cook, head of residential research at Savills.

The firm also projects that home purchase prices will increase by an average of 14.8%, ranging from 21.6% in the North West to single digit growth in London and the South. 

Values in the capital’s prime market will perform much more strongly, given price adjustments already seen in the capital since 2014.

But transactions, rather than house prices, are often seen as the ultimate measure of market strength, according to Cook.

He added: Sales volumes have fallen only -6.9% since the Brexit vote to 1.145 million, demonstrating the resilience of the UK housing market.”

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    has to be good news for those of us that are staying.

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    13.7% rise over 4 - 5 years is probably less than inflation over the same period. I would hope rents would outstrip inflation, especially with poor capital growth and punitive GGT imposed on any sales profit. Ironically Hammond's removal of Letting Relief will probably help retain properties in the rental market but reduce the availability for such properties to first time buyers and push up capital values.

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