By using this website, you agree to our use of cookies to enhance your experience.
Graham Awards


Boom! Years of rental market growth ahead, predicts agency

The latest forecast for the UK lettings market this year is that there will be a four per cent rise in rent on average and, over the next five years, a substantial 17.1 per cent increase.

Oliver Knight, head of residential development research at Knight Frank, says: “At a national level, the rental market is being shaped by a deepening supply and demand imbalance.

“The number of properties available to rent during Q1 2022 was more than a third lower than the five-year average pre-pandemic. At the same time, demand from tenants has continued to rise. The RICS residential survey reported that tenant demand rose to its highest level since 1999 in January, while new landlord instructions remained in decline.


“In part, the supply shortfall reflects the fact some landlords have left the sector because of tax and regulatory changes in the last few years, a trend we don’t expect to reverse. We forecast a shortage of rental homes relative to demand will be a key factor underpinning rental growth in all regions in 2022, notwithstanding the fact that short-term inflationary pressures will, inevitably, act as a brake on larger rises as household finances are stretched.” 

Current forecasts from Oxford Economics suggest inflation will end 2022 at 7.0 per cent, with lower figures in the years ahead to 2026.6.

Knight continues: “In later years, supply will remain tight, but we are forecasting that earnings growth will act as the main driver behind rents, resuming a long-term relationship and supported by a robust outlook for the employment market. There is scope for stronger rental growth in areas of the country where rents are relatively more affordable, particularly in the North and Midlands.

“The prospect of further regulatory reforms towards the end of our forecast period, largely around minimum energy efficiency standards, have the potential to limit supply from mortgaged landlords further.”

Specifically with regard to prime London, Knight Frank’s Tom Bill adds:“The rental market in London and the Home Counties continues to be marked by high demand and low supply, which we forecast will produce growth of eight per cent in prime central London this year. 

“Very strong annual growth in the early months of 2022 reflects how far rents fell in the first half of 2021 as short-let property flooded the long-let market.

“Supply subsequently dried up as staycation rules were relaxed while demand grew as offices and universities re-opened. The resulting imbalance is working its way through the system slowly, maintaining strong upwards pressure on rental values this year.

“We believe that rental value growth will normalise from next year and we expect increases of below four per cent in prime central London from 2023, producing cumulative growth of 22.7 per cent [by 2026].”

Want to comment on this story? If so...if any post is considered to victimise, harass, degrade or intimidate an individual or group of individuals on any basis, then the post may be deleted and the individual immediately banned from posting in future.

  • icon

    "Some LLs have left the sector due to tax and regulatory changes' - just wait until EPC C hits!

     G romit

    ......and the abolition of Sec.21

  • icon

    Tricia - you took the words right out of my mouth, they have no idea what is to come, I will certainly be selling and it will be totally down to EPC C, i do understand it is not law yet but I have to plan along the lines that it will be coming in as is, all the other legislation is discouraging but only the EPC will stop me actually renting my properties.


    I will be selling as well. First one going through now and even in a 'hot' market this is a torturous process! So slow and valuations at the whim of a surveyor or a lender worried about what the market might do next! Result - selling early to get rid before I can no longer rent - so pressure on PRS increasing even before the legislation is announced.

  • icon

    We have inflation (in truth around 10%) we have added costs and red tape imposed on us by government, lack of supply and increased demand, so which way are rents heading ? it's not rocket science to work that one out is it ?

  • Fery  Lavassani

    In the North West on average each estate agent has between 180 to 194 applicants wishing to rent. Again on average they have "four" properties to let on the market. Here the majority of properties (two up two down) are pre 1917 built, hence single brick and no cavity. EPC change will definitely raise the demand to rent, due to the reduction of supply. I for one will not spend thousands to upgrade to C. On top of that, we currently have more than 160 legislations that cover the PRS. Abolishing S21, more regulations and legislations will push LL to leave the sector. Rent arrears, void periods, repairs, tax and new legislation keep LL awake at night. I will be sixty six in November and time to live a hassle free life. Sell them all and put my feet up.

  • icon

    My tenants will be paying for EpC improvements, if they can’t it will be next please.


    How do you plan to swing that with the Tenant Fee Act in place.


    Jen. It's called increased rents. Same result as all of the other taxes, regulations and red tape that we've endured over the last 7 years. Why do you think there's a chronic shortage of houses and skyrocketing rents. The tenant fee act simply added approx 3% to all my rents.

  • David Saunders

    So section 21 is being outlawed meaning sitting tenants for life (then handed onto next generation), shortly followed by rent controls along with EPCs. From now on property owners will need to be a sandwich short of a picnic to consider letting a house, flat or even a room, hence nasty Mr/Mrs landlord(s) is leaving and taking his/her properties with them so good luck Mr Gove and co when already high homeless figures go into orbit and proverbial hits the fan.

  • George Dawes

    But not for the prs , big brother is coming for your property and there's nothing you can do about it

  • George Dawes

    People won't be homeless . the govt will take your property that cant reach epc c then suddenly it becomes social housing and exempt !

    Don't you love living in a democracy lol ??

  • icon

    You are correct and the minister piloting this is a lord, i.e unelected politician.


Please login to comment

MovePal MovePal MovePal
sign up