UK rents set to soar another 18% over five years – as landlords leave

UK rents set to soar another 18% over five years – as landlords leave

0:02 AM, 20th November 2024, About 2 hours ago

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Rents in the UK are set to continue their upward trajectory, with Savills forecasting an 18% increase over the next five years – and a prediction that landlords will continue leaving the private rented sector (PRS).

The rise in rents will be driven by persistent high demand and a chronic shortage of rental properties.

Despite a slight slowdown in rental growth last year, particularly in London, the underlying imbalance between supply and demand is expected to drive prices higher.

Rents will grow by 4% next year but there’s an affordability issue as renters will see their finances being stretched.

‘See more landlords exit the market’

Guy Whittaker, a research analyst at Savills, said: “Slower rental growth through 2023 has led to a slight easing of affordability pressures in London.

“We expect that this trend will continue in the near term with rental growth of 2.5% in London in 2025, against income growth of 2.9%.”

He added: “However, we expect to see more landlords exit the market, further eroding supply, and affordability will once again take a backseat.

“This would mean that rental growth could be stronger than we have currently forecast.”

Looming 2030 EPC rating mandate

Savills says that rental properties are being snapped up 20% quicker this year, compared to 2018/19 which is fuelling price hikes.

Mr Whittaker explained: “The significant rental growth we’ve witnessed in recent years is a direct result of high demand and low supply.

“This trend is set to continue nationally, with rents outpacing income growth once again.

“Increasing rental supply in the next few years appears challenging.”

He adds: “The recent hike in Stamp Duty Land Tax for second homes is likely to discourage new buy to let investors and hinder portfolio expansion for existing landlords.

“The looming 2030 EPC rating upgrade mandate could push some landlords out of the market, especially in areas where the required upgrades surpass a year’s rental income.”


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