Rent payments set to skyrocket over next five years
As the uncertainty of Brexit continues, expert forecasts indicate that the next five years will see a large disparity between house prices rises and rental payments, potentially slowing the UK housing market.
Over the last 15 years, the growing margin between the monthly payments made by those who rent versus those who repay mortgages has grown substantially. When George Osborne announced that he was hiking stamp duty to clamp down on buy-to-let mortgages in April, to deter wealthy landlords from purchasing large numbers of cheaper homes, there were hopes that this move would make those properties available to first-time buyers looking to get themselves on the property ladder.
Unfortunately, as time progressed, it became clear that the strategy had backfired. Landlords continued to buy but passed on the higher fees to tenants, forcing rental payments to increase dramatically – and thus making it even harder for potential homeowners to make the switch from renting to owning.
With the uncertainty surrounding the UK’s pending exit from the European Union, the number of affordable homes being built has slowed, limiting the number of available properties for those with lower incomes. As a result, rent payments are increasing faster than house prices, a theme that is expected to continue until 2021.
The forecast, provided by prominent London-based estate agency Savills, indicates that while property values will increase by 13% over the next five years, the average rental payment will increase by 17% in the same time period.
The highest levels of disparity will be found in London, with rental prices rising by 24.5% versus a house price growth of only 10.9% – leaving property selling experts asking how those looking to buy their first home will be able to raise the necessary capital for a deposit.
“What is clear is that the housing market does not like political and economic uncertainty and this points to a lower growth, lower transaction market across the board,” said Lucian Cook, Savills’ head of residential research.
“We think sentiment will be affected as there is more of a realisation of what Brexit means for earnings, for the economy and for employment.”
This is bad news for people who are struggling to sell their homes, as their potential buyers strive to gather enough money for a down payment. If homeowners are in need of a quick house sale however, house buying companies are able to purchase any home for cash through a fast, efficient process with competitive prices.
“No-one wants to buy my home!” Why not ask National Homebuyers for advice, as we buy any house. Call 08000 443 911 or request a call back to find out how much you could get for your property.