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Rental supply shortage set to push up rents

Rents look set to rise over the next 12 months as the supply of new rental properties dries up, according to the latest survey by the Royal Institution of Chartered Surveyors (RICS).

It said small scale landlords are pulling out of the market due to recent tax and legislative changes which have made buy-to-let investments less profitable.

Landlord instructions remain in decline, with this indicator having been stuck in negative territory since 2016.  


Going forward, rents are expected to increase as a consequence of the imbalance between rising demand and falling supply.

In the sales market, activity levels are benefiting from greater political certainty following the outcome of last month’s general election. 

There has been a notable increase in residential property sales and this trend is likely to continue for the foreseeable future. 

The December 2019 RICS Residential Market Survey shows that sales expectations have increased significantly, with a number of other key activity metrics turning positive for the first time in several months. 

Sales expectations for the next 12 months have increased to a net balance of +66%, up from +35% in November, following a sharp rise in enquiries from potential buyers. 

This change in activity levels is expected to lead to property price growth in the near and longer-term due to continued imbalance in supply.

In December, 17% more survey respondents saw a rise rather than fall in enquiries from new buyers, up from -5% in November, at the headline level across the UK. 

Regionally, the majority of areas saw growth in interest from new buyers, with respondents in Wales and the North East in particular reporting solid growth. 

Enquiries also rose in London and the South East, marking a noticeable turnaround from the negative results in November.

Aside from a rise in enquiries from buyers, the number of agreed sales edged up at the national level to +9% net balance. This is the first time since May 2019 that the number of agreed sales has shown a positive result. 

Agreed sales in London and East Anglia delivered amongst the strongest improvement in sentiment, with net balances of +22% and +23% respectively, while sales reportedly weakened in Northern Ireland and Scotland.

Sales expectations for the next three months are also positive, for the third month running, with +31% of respondents anticipating transactions will increase. 

This sentiment is mirrored for sales prospects over the 12 twelve months, which have seen an even greater improvement.  

A net balance of +66% of survey participants forecast that sales will rise in the year ahead, up from +35% previously. The strongest net balances were returned in Wales and the South West, although all regions are showing strong improvement.

Simon Rubinsohn, RICS chief economist, commented: “The signals from the latest RICS survey provides further evidence that the housing market is seeing some benefit from the greater clarity provided by the decisive election outcome. 

“Whether the improvement in sentiment can be sustained remains to be seen given that there is so much work to be done over the course of this year in determining the nature of the eventual Brexit deal. 

“However, the sales expectations indicators clearly point to the prospect of more upbeat trend in transactions emerging with potential purchasers being more comfortable in following through on initial enquiries.”

While new instructions picked up at the national level, a net balance of +9% of contributors reported an increase, outside London and the South East, new sales instructions were more or less flat rather than picking up to any degree.

With regards to house prices, the survey’s headline net balance came in at -2%, compared to -11% previously, signalling a broadly flat national trend for the time being. 

Going forward, however, near term price expectations were revised higher in all parts of the UK. This indicates a large shift across previously weakening areas, such as London and the South East.

Back at the national level, a net balance of +61% of survey participants see prices increasing at the twelve month horizon (a rise from +33% last time). What’s more, the outlook for house price inflation was adjusted higher right across the UK.

Rubinsohn added: “The ongoing lack of stock on the market remains a potential drag on a meaningful uplift in activity although the very modest increase in new instructions in December is an early hopeful sign. 

“Given that affordability remains a key issue in many parts of the country, the shift in the mood-music on prices is a concern with even London expectations pointing to a reversal of course both over the coming months and looking further out. 

“This highlights the critical importance of the government addressing the challenge around housing supply particularly with the gradual phasing out of the Help to Buy incentive.”

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Poll: Do you agree that rents are expected to increase as a consequence of the imbalance between rising demand and falling supply?


  • icon

    I am surprised!

    If you have a million letting properties and a million tenants and nobody looking for a new place to live then you have perfection.

    If a thousand properties are withdrawn then you have a thousand people looking for somewhere to live. You also have 999 thousand perfectly happy tenants (one hopes). This is hardly a disaster in percentage terms for the country. Few tenancies are ever long term so there are always new lets available even if you have to wait for a few weeks to get one.

    Right now my hypothetical one thousand is starting to increase and i am going to suggest that will be rapid but even if it goes to ten thousand it will be nowhere a lettings disaster but it will be one hell of a disaster for people who need somewhere to live without buying.

    If councils want to get every one housed then they need to make sure landlords can function and make a profit. Take that away and it is councils that will have to pick up the problem and house people. If you are a councillor reading my comment it is time to start thinking really hard about what you are doing because you are about to cause chaos. Of course some councils want that so they can have a new department dedicated to sorting out the obvious.


    There are already 85k households living in emergency/ temporary accommodation. This figure ignores those that have moved in with other family members of course. The point is we're already way past the 10k figure in your hypothetical example but the question is when will Government say 'enough is enough'. Perhaps when they wake up and stop listening to the likes of Shelter?

     G romit

    It's central Government spurred on by the likes of Shelter, Generation Rent, et al who are causing the problem. It's Local Council that will have to deal with the fall-out.


    at least 1000000 new entrants to uk annually


    Ok, I did not know it was that high but I stick by my premise. If you have ever done any marketing you will be well aware of fake demand in this sort of situation. This is not something evil, it is just a natural phenomenon.

    If the good people of government want rent prices to drop then there needs to be more properties to let than tenants wanting to take out a lease. Our good government is doing exactly the opposite.

    I am going to add that a lot of people will never be wanted as commercial tenants. They are just too much of risk and I have first hand experience! I don't have a nice moral answer on that.

  • icon

    I cannot begin to comprehnd how lack of supply coupled with increased demand could possibly affect the level of rent, am I now qualified to become an MP?


    It seems that 4% of the respondents to this survey are equally well qualified - or can't read - probably both.

  • icon

    Gosh! The % of non readers has now risen to 11% - they're possibly later risers than the literate majority.

  • PossessionFriendUK PossessionFriend

    … or perhaps Diane Abbotts been doing the figures ?

  • icon

    This web site is "Landlord Today" not, "Landlord Six Months Ago".


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