In their July 2018, RICS (The Royal Institution of Chartered Surveyors) predict that due to a continued fall in new landlord instructions, demand will result in rent increases.
The report states that for eight consecutive months, new landlord instructions are down. Although the rate of increase has slowed, rental demand continues to increase, so the pressure on rents is upward. Over the next year, they predict a near 2% rise. By mid 2023, they predict rents will rise by 15%.
The changes to taxation for small Buy to Let landlords introduced by George Osborne are widely blamed for the fall in new instructions. His changes were designed to help first time buyers get on the property ladder. The main points were;
- A 3% increase on stamp duty for buy to let landlords
- A restriction on tax relief on mortgage payments to the standard rate of tax
These changes whilst with good intent, have led many small landlords exiting, or not entering the market. The full impact of these changes is still to be felt.
Shortage of Homes
The root of the problem, both for buyers, due to high prices and renters, facing increasing rents, is due to supply. In our separate article we highlight the issue. For millenials trying to get on the property ladder, higher rents mean less chance of saving for a deposit. For those not able to call for help from the Bank of Mum and Dad, or on very high salaries the outlook is bleak.