Further price hikes expected for renters over the next five years
According to a new survey by the RICS, rental fees across the country are expected to rise faster than house prices by 2021.
The new survey, commissioned by the Royal Institute of Chartered Surveyors, is yet another nail in the coffin for the dreams of those who hope to buy, but are unable to gather the necessary deposit due to sky-high rental prices.
In detail, the research has found that while house prices are due to rise by around 20% by 2021, rental costs will increase by as much as 25%.
Thanks to the stamp-duty hikes in April last year – as well as the harsher restrictions placed on landlords themselves – many property owners are looking to downsize their portfolios over the next 12 months. This worrying trend is likely to exacerbate the issue by reducing the number of new listings coming on to the market – limiting the number of properties available for renters.
Even estate agents have also found the benefits of property rental management less attractive with the recent ban on lettings fees.
The restrictions on landlords were originally put in place to make cheaper properties available to potential home owners, but even low-end housing is still out of the affordability range for many first-time buyers.
With rent costs now accounting for nearly half of an average UK worker’s wages, these statistics should be considered as “yet another symptom of a very sick housing market that is carving ever-greater chasms between those who own a home and those who don’t,” according to David Orr, the Chief Executive of The National Housing Federation.
“Private renters are having the hardest time of it, paying the most as a proportion of the pay cheques and in real terms,” he said “We need to bring an end to these extortionate prices and give people real choices, by building the homes this nation needs.”
As rental demand continues to grow, the government has been met with a barrage of negativity regarding its handling of the housing crisis, with many property selling experts critical of the propositions spelled out in the White Paper released early this month.
It is clear that unless there is radical reform in the government’s approach to building affordable new-build homes, the number of those renters who have the money to put down a deposit on a new house will continue to dwindle – and will likely have a knock-on effect on those looking to sell their homes fast.
Vendors can of course use property buying companies, who are happy to buy any house for cash irrespective of location or condition. More importantly, with a quick and efficient process, sellers do not have to worry about agency fees or a potential buyer pulling out at the last minute.