Rent hikes are inevitable unless the government reverses tax changes for landlords, it has been claimed.
Tenants face paying an average of £23 a month more in rent, totalling £414 across a typical 18-month tenancy, according to MakeUrMove.
The online letting agent forecasts that the average monthly rent, which it says currently stands at £918 a month, is set to rise by 2.5% in 2018.
Overall, the company predicts that around 2 million tenants across the UK will be hit with rent hikes totalling a combined £46m or so a month, as many landlords are forced to pass extra costs onto tenants by pushing up rents.
The government has attempted to create what the former chancellor George Osborne described as a “level playing field” between landlords and those buying homes to live in, by increasing taxes for landlords such as increasing stamp duty costs, cutting mortgage interest relief, scrapping the ‘wear and tear’ allowance, among other measures.
The impending tenant fees ban is also contributing to create a perfect storm of financial pressures on landlords, leaving many with little alternative but to increase tenants’ rents to cover their costs.
Renters in London in particular are in for a rough ride, with around half of landlords in the capital planning to increase rents.
In the North East and Scotland tenants will also be adversely affected, with 46% and 45% respectively of landlords in these areas saying they will be forced to increase rents due to recent tax and legislation changes.
Alexandra Morris, managing director of MakeUrMove, said: “Rents have already been increasing year on year, and it’s likely that 2018 will be the year that sees UK tenants feel the biggest impact yet from the recent changes introduced to the private rental sector.
“From our experience, we know many tenants are already stretching their monthly budgets to afford rental properties, and additional rent increases could be the final straw, tipping them into debt or rent arrears.”
In addition to the implications on rents, the recent study by MakeUrMove also found that 10% of landlords would definitely have to sell their property due to legislative changes, reducing the supply of much needed rental stock.
Morris added: “The value of these landlords cannot be underestimated, they are central to the UK’s rental sector and add valuable capacity to the market, and the Government needs to recognise this and start to support them, for the sake of the UK’s millions of tenants.”