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UK rents to rise 11.4% by 2023 – CBRE

UK rents are predicted to rise 11.4% in the next five years, according to a forecast by CBRE.

Alongside fairly ‘moderate’ growth over 1.8% in UK house prices, the property group forecasts that rents will rise 1.3% in 2019.

The report, which looks at how economic, political, financial and technological trends might affect property markets, foresees further growth in rents leading up to 2023, supported by a drop in housing supply in the PRS amid ‘dampened investor demand for buy to let’ and growing demand for rental homes, particularly from lower-earning younger people.

CBRE estimates that rents are likely to rise 1.3% in 2019, followed by growth of 1.9% in 2020, 2.5% in 2021, 2.7% in 2022 and a further 2.6% in 2023.

Miles Gibson, CBRE’s head of UK research, said: “We expect rather weak house price and rental growth over the next year, but we think that the lack of supply and low interest rates for mortgages will hold prices up.”

He added that weak supply and strong demand is “creating a lot of interest among investors” in the student accommodation and build-to-rent sectors, especially in terms of institutional capital.

Some £2.1bn of institutional funds had been invested in the year to Q3 2018, 51% higher than the same period of 2017.

Investment is on a firm upwards trajectory, and investment volumes in 2019 seem likely to exceed 2018’s total.

UK house price and rent forecast, 2019 to 2023, %, annual and cumulative: 

2019

2020

2021

2022

2023

2019-2023 (compound)

House prices

1.8%

2.3%

3.4%

3.7%

1.3%

13.1%

Rents

1.3%

1.9%

2.5%

2.7%

2.6%

11.4%

Source: CBRE Research

Poll: Do you broadly agree with the CBRE's forecast for growth in rental prices?

PLACE YOUR VOTE BELOW

  • icon

    Rents will increase mainly due to extra costs and red tape placed on landlords, however i do think house prices will drop but that's only a problem to those that have to sell and have borrowed too much.

  • G romit

    I think the CBRE's forecast for rent growth is on the low side. I feel the combined effects of higher demand, higher costs to Landlords (in the form of higher taxes & more regulations) and the reduction in supply of rental properties as Landlords exit the market (currently 4,000-4,500 per month).

    George Osborne's "Restriction on Mortgage Interest Relief" aka Sec.24 aka #TenantTax is only just starting to kick in as the tax bill for the first phase of this massive tax hike hits home this month. This will force many Landlords to raise rents amd/or exit the market in increasing numbers.

    icon

    I am curious that the solution to rising costs force many landlords to have to raise rents?
    Where I am, it is almost impossible to increase rents above levels that are affordable.
    The market dictates the price that landlords can charge in any given area and raising rents above this level to recover extra costs would not be possible. Therefore, the landlord has to 'take the hit'.
    I am in the unenviable position of having to accept less rent for one of my properties than I received twenty years ago, so there has been an actual reduction in income.
    I cannot force people to take on a property at a higher rent and the end result would be an empty building and therefore no income at all.

     
  • Paul Barrett

    Rising costs have to be paid for.
    If rents cannot achieve sufficient to cover costs with a decent profit margin aswell then the property is unviable and needs to be sold.
    Selling would actually be advantageous as reducing rental stock will inevitably result in higher rents
    Tenants would simply hsve to find the resources to pay increased rents.
    The alternative for them is to MOVE to a cheaper area or be homeless.
    There is little point in LL retaining unviable properties especially in low CG areas.
    It is actually far better for LL to reduce and deleverage their properties as invariably that will result in higher rents.
    Few LL are buying especially the low growth stuff up North.
    I am jacking up my rents by £100pcm every new AST.
    No problems obtaining it.
    Yes the tenants whinge but now they have no choice but to pay the increase as there are gratifyingly fewer rental properties as a consequence of all that has been commented on.
    If S24 and the SDLT surcharge was abolished there would be an immediate bounce back of more rental stock coming to market.
    It seems this will never occur.
    The Tories are willing to carry on their war against the PRS.
    Yes LL will suffer but far more tenants will suffer.
    Rents are going up as they have to as LL will not take the hit.
    It is pointless operating unviable properties when it is relatively easy to sell them off to dopey FTB who are more than content to buy properties that don't meet EPC requirements.
    Rents are increasing and will continue to increase as long as the PRS reduces in size.
    Tenant demand continues unabated.
    Govt by its stupid anti-PRS policies is causing rents to increase.
    My rents would usually have increased by about £25pcm once per year.
    Now it is £100pcm because of S24 etcI feel that a return to MIRAS is required for genuine FTB.
    This will enable LL to get rid of their unviable properties which would be the case even without S24 etc.
    EPC requirements are very hard to achieve for you standard Northern terrace property.
    In 15 years time the C standard will be required.
    This makes much of the rental stock unviable.My rents need ro be £400 more just to pay for the full S24 liability.
    So actually no RTI
    The Govt is bonkers.
    Their policies are causing rents to increase by substantial amounts whereas had they not introduced such bonkers policies the market would have constrained rents.
    Govt never seem to understand that interference in markets will always cause costs to increase which with the PRS means rent increases are required to pay for all the interferences.
    I

  • icon

    My Rents rise when mortgage rates rise, service charges increase, maintenance costs hence only increased rent once in past 8 years.

    Paul Barrett

    You have a very strange way of operating a LL business.
    Still each to their own
    Most leveraged LL would ve bankrupted if they followed your peculiar business practices.
    Still if it works for you good luck.
    It certainly doesn't for me which is why my rents now increase annually

     
  • icon

    It may be all good for you to do that Paul, but if your properties were in my area, then they would all be empty.
    Unless the price is right, then they don't rent out simples.
    If you start raising rents in properties here that are occupied, they would just leave and find somewhere cheaper.
    Like I said previously, some of the properties I have rent for less than they did 20 years ago and most rent for about the same that they did in 2010. There is nothing that can be done about this, because this is how the market in our area operates.

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