Rents are expected to surge 15 per cent over the next five years thanks to increasing demand and limited supply following government tax assaults on buy to let investors.
A Royal Institution of Chartered Surveyors market snapshot released this morning shows 22 per cent more respondents reporting a fall in new landlord instructions in the last three months.
This is the eighth consecutive quarter the number of rental properties has fallen.
The shortage of supply means rents are projected to increase by almost 2.0 per cent nationally over the next 12 months and by no less than 15 per cent by 2023.
The institution says the surge reflects the changes in the rental sector after small-scale landlords quit thanks to recent tax and regulation changes.
East Anglia and the South West are expected to see the sharpest growth over the period.
RICS chief economist Simon Rubinsohn says: “The impact of recent and ongoing tax changes is clearly having a material impact on the Buy to Let sector as intended.
“The risk, as we have highlighted previously, is that a reduced pipeline of supply will gradually feed through into higher rents in the absence of either a significant uplift in the Build to Rent programme or government funded social housing.
“At the present time, there is little evidence that either is likely to make up the shortfall. This augers ill for those many households for whom owner occupation is either out of reach financially or just not a suitable tenure.”
And Abdul Choudhury, RICS’ policy manager, adds: “Our survey suggests that recent government policy and legislation changes have impeded the growth of the private rented sector, which is a vital part of a functioning homes market.
“Withdrawing tax breaks that small landlords relied on, placing an extra three per cent on second home stamp duty, and failing to stimulate the corporate build to rent market, has understandably impacted supply.”
Choudury adds: "The government must urgently look again at the private rental sector as a whole, including ways to encourage good landlords."
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A useful statistical projection certainly.
Is RICS advising (or even being asked to advise) government on what ought to be done to help to resolve this worrying prospect?
I doubt 15% nearly covers it. If we do not get a real government soon (one that governs and does not just b;;;;r around with social theories) then normality will collapse and it could be 15% a year until the country goes totally bust.
On the other hand, with a good government which has good financial and international ability a 10% rent rise may take ten years to achieve.
Reading the RICS report, it reflects what has been said and threatened in these pages for some time; that private landlords are selling and leaving the PRS and that shortage of supply of property to let is becoming more acute.
Given the damage that is being done and the difficulties that are being caused, it is hard to believe that government is being so stupid in implementing policy with this outcome as the objective. It seems more likely that the true agenda is hidden (and for politicians not to be "straight" would be no surprise) and the uncharitable motives of social manipulation attributed to HMG in these comments probably have some basis in reality. Any advice proffered by the RICS is likely to have little effect, if the true motives are political.
The motives definitely were political about a year ago ... not sure how many Housing Ministers ago that was. The aim is to delete PRS landlords and insert purpose built lettings homes into new build estates, owned nit by individual landlords but by district councils or large companies. Stated logic was to get rid of rogue landlords .... not very joined up thinking in my opinion. This was stated to me by Gavin Barwell when in the HM role
Rents will be a lot more that 15% up in five years time.
See, as I have said on more than one occasion, politics is the last place a man with NO DISCERNIBLE ABILITY can make a decent living.
We will never see a government that has the ability to make a sensible and workable policy that will help landlords, tenants, councils, the tax man.
Rent capping will arrive soon with the governments tenant favoured tenancy agreement, and end to s21, all the angles are gradually being covered
All introduced under the guise and propaganda to help tenants to attract generation rent voters
Fine bring rent caps in. It will only hurt the tenants. As it is I don’t increase rents yearly, if my costs haven’t increased, and my profit margin is stable then no increase in rents, however with caps I will increase by the maximum allowable ever opportunity as I don’t know what’s around the corner with regards maintenance costs and won’t be able to increase accordingly
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