A business analyst at a prominent consultancy says landlords who resist the temptation to quit the sector are “in a position of real power.”
Sarah Coles of Hargreaves Lansdown says that although tenants are currently under “horrible pressure” because of rent rises, that situation is only going to intensify as a result of landlords quitting the sector, reducing supply with an inevitable effect on prices.
“Those landlords who are left, are in a position of real power, because the number of people looking to rent continues to rise” says Coles.
“Rising house prices mean more people renting later in life, which in turn means tenant numbers are booming. In recent months, they’ve been joined by people who’ve sold up and are being forced to rent because they can’t find anything to buy. With several potential tenants chasing each home, landlords are hiking rents and being pickier about who they accept” she continues.
Coles - commenting on the latest rental survey by the Royal Institution of Chartered Surveyors - says renters are having a tough time.
“They already spend a significantly larger chunk of their income on housing costs than their home-owning counterparts, and runaway rising bills from energy to petrol and food means they can’t afford to pay more to rent their current home. More and more are being forced to move, which is horrendously expensive in itself.
“Their new homes are likely to be smaller, and there's been a growth in people renting a single room in a larger property to cut costs. Right now, we’re not seeing a boom in sofa surfing and a return to living with parents, but the agents think this isn’t out of the question.”
The RICS snapshot suggests that a net balance of 48 per cent of respondents have seen rent rises, while landlord instructions remain in decline.
At the five year-time horizon, growth in rents is expected to outpace that for capital values. Rents are now anticipated to rise by a little over five per cent per annum through to 2027 while capital appreciation projections stand at four per cent on the same basis.
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