UK house prices are continuing to rise, with price growth supported by an ongoing lack of availability of homes. But, the Royal Institution of Chartered Surveyors (RICS) is now expecting the pace of rent increases to overtake that of house prices.
In its January survey, the RICS reported its regular monthly details which showed house prices grew in January and that sales activity was little changed from December.
“The monthly RICS housing market survey is closely watched by property professionals as the responding surveyors are giving their review of housing market activity as they experience it,” said Wimbledon-based estate agent Robert Holmes. “While they have some interest in a buoyant housing market, they don’t give actual numbers or figures, which helps make their market commentary reliable.”
But, the surveyors who responded to the January survey, also answered questions on expectations for rents and house prices over the next five years. The results might surprise some, but not others; in five years’ time, RICS surveyors anticipate rental prices to rise by a higher rate than house prices. Specifically, while rents are expected to be 25% higher by 2022, house prices are seen rising by a little under 20% over the same period.
The main reason for that view is that there are fewer new rental properties being advertised and surveyors also stated that more landlords are planning to cut their Buy-to-Let (BTL) rental portfolios, following property-tax related changes. Highlighting this detail, were other figures from the RICS survey showing the number of new rental instructions from UK landlords fell for a fourth straight quarter in the final three months of 2016.
“The Government’s assault on BTL landlords will continue to be felt over the next few years as more investors are affected by the tax changes across their portfolios,” said Best Gapp. “While for some, the impact won’t be too great, for others it could well be enough to make their time as a BTL Landlord, no longer financially viable.”
One caveat to this RICS surveyor rental estimate, is that the January survey was conducted before the Government’s much anticipated Housing White Paper. However, although there was much good news and well-thought-out detail in it, they are far from being enacted and solving the housing crisis. And that suggests that surveyors and landlords alike aren’t likely to change their views before anything actually changes or improves.
The Government’s Housing Paper did show one significant change that should prove to be supportive of the UK’s rental market – it included measures for improvement for the rental sector and not just for builders or home-buyers.
“The step-change in the Government’s attitude to housing in its twice-delayed Housing White Paper was very welcome and shows they are finally realising the still growing importance of the UK’s rental sector,” said Lawsons & Daughters. “Hopefully, this new view will provide further support for the Private Rental Sector (PRS) and Britain’s currently beleaguered BTL landlords, as well as those who rely on them for somewhere to call home.”