Rents expected to rise:

Chartered surveyors expect rents to outpace house price growth in the next five years, a recent Residential Market Survey has found. Rents are expected to increase by 25% compared to just under 16% for house prices. The survey also revealed the government’s buy-to-let crackdown, especially the reduction in mortgage tax relief, is slowing down market sentiment.

The scale of the challenge government faces as it announces its new approach to housing is clearly demonstrated in the results from the latest survey. Not only are the headline price and rent series pointing to further increases over the course of this year, but more significantly the longer term. It is expected that rent increases will continue to grow at a faster pace than wages putting even greater pressure on affordability.

Supply and demand in the housing market have been out of kilter for several years, which has caused house prices to increase well beyond wage growth. The recent housing white paper outlines some positive steps to help tackle the housing crisis, but the government’s approach needs to be developed further into a framework of tangible actions that will reduce the UK’s housing deficit. With house prices expected to continue to increase, the balance could eventually shift in favour of supply as more people are priced out of the market.

Landlords will look on this news as a positive as the tax reforms start to hit this year.

If you are looking for a new or re-mortgage, please do get in contact and one of our advisers will be happy to assist.