Tenants face an “acceleration” in rent increases over the next five years as a result of the demand for private rented housing outstripping supply.
The Royal Institution for Chartered Surveyors (RICS) warns that, in the lettings market, the latest set of results – which form a part of non-seasonally adjusted series – are indicative of demand from prospective tenants rising firmly for an eighth month in a row.
That’s a net balance of +22%).
Alongside this, RICS says landlord instructions remain in decline.
With demand still outstripping supply, rent expectations for the coming three months remain positive – a net balance of +24%.
But, further out, RICS sees contributors ‘pencilling in’ rental growth of approximately 2% over the coming twelve months.
Significantly, at the five-year horizon, RICS sees the imbalance between demand and supply in the lettings market expected to lead to an acceleration in rental growth, which is seen averaging to around 3% per annum through to 2024.
In comparison, average price growth projections stand at just over 2% on the same basis.
The warning from RICS mirrors that of Professor David Miles, a former member of the Bank of England’s Monetary Policy Committee, who has written for the Residential Landlords Association (RLA) that “rents are likely to be higher as supply gradually shrinks.”
RLA policy director David Smith said the RICS figures demonstrated what RLA had long predicted.
“Namely that because of recent tax hikes on the sector and threats to remove Section 21 repossessions without putting proper alternatives into place, landlords are not investing in new homes to rent, leading to demand outstripping supply – this only serves to hurt tenants as they face less choice and higher rents,” said Smith.
“Given how clear the evidence is the Government urgently needs to change course, and end those tax measures which are choking off investment in new homes to rent,” he said.