The cost of renting is set to outpace the growth of house prices across the UK as demand continues to outstrip supply, new figures have revealed.
According to the Royal Institute of Chartered Surveyors, rents could increase on average by 5% for the next five years, above the 4.7% yearly increase for house prices. Both rises in rents and house prices are likely to outstrip any increase in household income.
Rics predicts that next year rents will increase by an average of 3% compared to a 6% rise in house prices.
The principal driver of this trend will continue to be the lack of housing stock as a result of demand exceeding supply.
Simon Rubinsohn, chief economist at Rics, blamed the government’s plans to dampen activity in the buy-to-let sector and its focus on promoting home ownership “at the expense of other tenures”.
He said: “Discouraging buy-to-let could see private rents take even more of the strain if institutional investment doesn’t increase significantly, particularly given the likely reduced flows of social rent property going forward.”
With house prices set to rise across the whole of the UK in 2016, East Anglia is expected to have the highest predicted rise at 8%, while the South East, West Midlands and North West are predicted to outperform the market. The North East is likely to see a more modest price rise of 3%.
“Housing has clearly leapt up the government’s agenda, but despite the raft of initiatives announced over the past year, the lags involved in development mean that prices, and for that matter rents, are likely to rise further over the next twelve months.
“Looking further out, there is some justification for taking a more optimistic view of new build with significant incentives being put in place to deliver starter homes. While this may not on its own stem the upward trend in house prices, it could help to slow the rate of growth to something closer to the probable rise in household incomes,” said Rubinsohn.
House price growth forecast for 2016
| Region | Predicted growth |
| East Anglia | 8% |
| South East | 7% |
| West Midlands | 7% |
| North West | 6% |
| Wales | 6% |
| Yorkshire and Humberside | 6% |
| London | 5% |
| Northern Ireland | 5% |
| South West | 5% |
| East Midlands | 4% |
| Scotland | 4% |
| North East | 3% |
Source: Rics
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The UK housing portfolio is quite adequate if one discounts the numbers of immigrants occupying our country and continuing to flow in. Therefore overpopulation is the driver of the problem. The solution does not take a degree in advanced mathematics to figure out.
Which will mean more ppl priced out of rent calculations criteria which leads to more rental on market longer as the higher end are able to get mortgages etc. So LL greed will be obvious. Such a shame of that personality which was not there back in the 60/70’s rentals market.