Soaring landlord costs to push rents up 25% over next four years – forecast

Soaring landlord costs to push rents up 25% over next four years – forecast


Todays other news
Northern cities are set to outpace the south for the...
A sustainable energy consultant gives tips that really work -...
The views of expert working for Stacks Property Search, a...


Rents will rise 25 per cent over the next four years, outpacing the modest 5.5 per cent House price growth across Britain during the same period.

The prediction has come from Hamptons, the lettings agency, which says house price falls will stop next year followed by small rises in 2025 and 2026.

But Hamptons says that taking inflation into account, average prices in Britain will have declined by nearly 10 per cent between the start of 2023 and the end of 2024.  

However in the private rental sector te  build-up of long-term supply issues combined with rising landlord costs will continue to put pressure on rents.  

“We forecast the average rent on a newly let property in Great Britain will rise 8.0 in Q4 2023, 7.0 per cent in Q4 2024 and 5.0 in both Q4 2025 and 2026” says the agency. 

London rents are likely to rise faster than the all-Britain average in 2023 and 2024 by 9.0 and 8.0 per cent respectively.

A combination of lower yields and more landlords being reliant on finance will put added pressure on investor profits in the capital, Hamptons warns. 

Agency research head Aneisha Beveridge says: “There’s a strong argument that the Bank of England’s quest to quell inflation has hit the rental sector harder than any other part of the housing market.  A build-up of long-term supply issues combined with soaring landlord costs is putting upward pressure on rents.  

“And it’s hard to see any of these pressures receding any time soon, which is why we expect rents to continue rising over the next few years.”

Hamptons says give that 68 per cent of landlords own a buy-to-let with some sort of finance, rents will primarily be set by where interest rates settle in the medium term.  

“We forecast rents will rise by 25 per cent across Great Britain between 2023 and 2026 with the largest increases during 2023 and 2024 as landlords roll off fixed term deals and face considerably higher mortgage payments” it adds.

This will likely put the average rent of a home in Great Britain at £1,550pcm, £333pcm more than in December 2022.  Despite this rental growth, many landlords will still find themselves materially worse off than a couple of years ago.

 

The agency anticipates that rental growth will be led by the North of England and London over the next year.  

These are places where larger portfolio landlords, which are more likely to be reliant on some form of finance, are most active.  London is also the lowest yielding region in the country on average and so landlords here have less ability to absorb higher costs.

And it warns that the Renters Reform Bill is likely to further add to landlords’ costs, and more regulation may well be in the pipeline whichever party wins the general election.

Share this article ...

Join the conversation: Login and have your say

Want to comment on this story? Our focus is on providing a platform for you to share your insights and views and we welcome contributions. All comments are screened using specialist software and may be reviewed by our editorial team before publication. Landlord Today reserves the right to edit, withhold or delete comments that violate our guidelines, including those that harass, degrade, or intimidate others. Users who post such content may be banned from commenting.
By commenting, you agree to our Commenting Terms of Use.
10 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments
Recommended for you
Related Articles
The activist group wants far more tenant power than given...
The briefing, held this week, aimed to bring letting agents...
Councils must be accountable for their policing of private rental...
Your chance to quiz a top legal expert on the...
The tenant was in hospital when he was evicted illegally...
The controversial proposal is backed by the Welsh Government...
Growing arrears, falling yields and new laws make 2025 a...
Recommended for you
Latest Features
Northern cities are set to outpace the south for the...
A sustainable energy consultant gives tips that really work -...
The views of expert working for Stacks Property Search, a...
Sponsored Content

Send to a friend

In order to send this article to a friend you must first login. Click on the button below to login or sign up.

No one likes pop-ups ...
But while you're here