Rent rises to halve by late 2023 says market analyst

Annual rent rises that are currently 10 per cent or more are likely to halve to “mid-single digits” according to a prominent housing market expert. 

Gráinne Gilmore is currently director of research and insights at the agency and property consultancy Cluttons, but is best known as a former Zoopla housing expert.

In a podcast she tells Iain McKenzie - chief executive of The Guild of Property Professionals - that the current “landlords’ market” is unlikely to change any time soon. 

“All data is pointing to rental demand continuing to exceed rental supply, which will put upward pressure on rents. But if we consider the ‘roll over’ tenancies – where landlords, keen to keep a good tenant and so come to an individual agreement on rent rises – in conjunction with the new lets, the average rental price growth will be closer to mid-single digits during the course of the year rather than the current double digits we are seeing now.

“Over the past five years the various policies and tax changes that have come into the buy to let market, means that some landlords have had to review their portfolios. There are more legislative changes still to come such as EPCs, which up until now landlords have not had to think about.

“If the property isn’t meeting the required EPC levels, landlords will have to make the decision to either spend the money to get the property to where it needs to be to meet the requirements or sell. Over the next few years there will be a few elements that will have landlords question whether they would want to reduce the size of their portfolios.” 

She continues: “Anecdotal evidence suggests that in many situations landlords are losing money and will need to potentially rearrange their agreements with tenants. There are obviously landlords who own outright and are not dependent on mortgages, or those who are on longer fixed terms, so this will be an incremental change over time across various markets. Therefore, that may not be enough to impact overall rents, but you will see a changing ownership structure for the rental market.”

Gilmore also joins the growing chorus of voices noting that the fall in the number of social homes - meaning that the private rental sector is left to accommodate a wide range and volume of tenants than before.

“Individual landlords are responsible for that to a certain extent, but there is no cohesive recognition of that fact at the moment. While everyone to trying to increase house building, social housing, and affordable rents, it is not happening at the level needed to keep up with demand” says Gilmore. 

You can hear the podcast here: The Home Stretch podcast.