Rental Property Market
So far in 2018 we have seen little movement in the rental property market compared to 2017. Could it be the continuing uncertainty of Brexit and rising interest rates that put the brakes on the property market?
Rents in the private rented sector have risen by 1.6 per cent in the year to August. The areas that have seen the greatest rise of 2.8 per cent have been in the East Midlands, including Birmingham, Nottingham and Derby.
In central London, despite the shortage of supply in relation to demand, rents have fallen by around three per cent in the past 12 months which mirrors the similar fall in property values. Source: National Statistics (ONS) rents
As expected there are always factors that play a big part with the rentals market, both political and economic.
We’ve compiled some of the leading experts from across the property sector explain their predictions for the UK property market for the rest of 2018.
– Knight Frank predicts that rental values in the UK will rise by 1.2 per cent in 2018 but fall by 0.7 per cent in London with outer London seeing higher falls than central London. “Rental value declines are bottoming out as the rate of new supply slows down,” says Tom Bill, Head of London Residential Research at Knight Frank.
– ARLA Propertymark (formerly the Association of Residential Letting Agents) believe 59 per cent of lettings agents say that they expect rents to rise in 2018 compared with just 19 per cent who expect them to fall.
– Savills expect the number of mortgaged investment purchases to fall by 27 per cent in the next five years and to be 10,000 in real terms in 2018.
– Savills has also forecasted that rents will grow faster than house sale prices in London for the first time since 2011 and that over the next five years they will rise by a further 17 per cent.
– Real estate firm JLL is predicting rental growth of two per cent per annum in both 2018 and 2019. Experts also believe that, because of high prices in the sales market, the rental market will continue to expand and prove more robust than expected over the next five years.
– Strutt & Parker is predicting that, in prime central London, lettings price growth will outperform sales over the course of the year. “The proportion of households in the rental sector is growing, and our research shows an increasing preference for long-term letting,” says Kate Eales, Head of National Lettings at Strutt & Parker.
– A survey by the Royal Institution of Chartered Surveyors (RICS) has revealed that, following policy changes such as increases in stamp duty, more landlords are expected to leave than join the market in 2018. RICS members now realise that rents are likely to rise by three per cent a year for the next five years, outstripping rises in house prices.
– Buy-to-let specialists Landbay, CEO John Goodall predicts that “rents in the areas outside London will rise as we head into 2018, particularly across the eastern region of the UK”, and that there will also be “greater tenant interest in the London commuter counties,” with the capital becoming increasingly unaffordable.
– The lettings fees ban – announced by the government in 2016 – could come into effect in 2018 but it has been criticised by commentators who say the ban could lead to increased rents for tenants of up to £255 per year. However, others disagree and housing charity Shelter has welcomed the step.
There now seems to be an assumption that rises in rents during 2018 are likely to exceed rises in house sale prices. This is better news for landlords than tenants, particularly at a time of rising inflation. But the rises are not predicted to be substantial, and in the current market, not all landlords are going to raise their rents, particularly if they have reliable tenants.
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