Residential rents are expected to rise faster than house prices over the next five years, a study has claimed.
The research, conducted by the Royal Institution of Chartered Surveyors (RICS), predicts that rents will rise by around 25 per cent, compared to just 20 percent growth in the value of property.
And this is all down to supply and demand, says the report.
Due to changes to Stamp Duty in April this year, as well as upcoming cuts to mortgage interest tax relief, RICS predict that landlords will scale-back their portfolios over the next 12 months.
This will not only push up the supply of properties available to buy, in turn lessening vendors’ selling power, but decrease the supply of properties available to rent.
Even in the three months to January 2017, tenant demand for rental properties continued to increase, highlighting an imbalance between the supply and demand, the RICS report said.
Promising to provide a solution, the Government released its housing white paper this month detailing a wave of new home building. The paper suggests that local authorities should be forced to publish projections for future planning projects, that developers should be pressured to commence building on already-purchased sites, and that tenants should be better protected.
Simon Rubinsohn, RICS Chief Economist, said: “The scale of the challenge Government faces as it announces its new approach to housing is clearly demonstrated in the results from our 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 medium term view of RICS professionals working up and down the country is that both house prices and rents will over the medium term continue to grow at a faster pace than wages putting even greater pressure on affordability.
“Whether the measures announced can ease this trend remains to be seen.”