UK property: Rents to rise faster than prices by 2022

UK property: Rents to rise faster than prices by 2022

Increasing tenant demand will see rental rates increase faster than property prices over the next five years, underlining the need for more PRS investment.

Summary:

  • UK property investors will see rental growth rise faster than real estate prices over the next five years
  • Average monthly rates will increase 25% by 2022, while average values will rise by less than 20% over the same period, highlighting the importance of buying in locations with strong yields
  • At a time when the government wants to revolutionise the private rented sector, its led to calls for a “turbo-boost” in investment and development in the build-to-rent market

Thinking about a UK property investment in the next five years? Focus on areas that boast strong yield growth such as the north of England.

That’s because a new survey from the Royal Institution of Chartered Surveyors (Rics) predicts that UK rents will rise faster than average values by 2020. Rics believes average monthly rates will grow 25% by 2022, while average prices will increase by less than 20% over the same period.

The survey found that the demand for rental accommodation from tenants continued to rise in the three months to January. But with recent measures introduced by the government aimed at curbing buy-to-let investment, Rics believes renters will have less homes to choose from, which will consequently drive the pace of monthly rate growth.

It comes at a time of key step-change for the private rented sector. Last week the government released its Housing Whitepaper which promised increased support in the development of more purpose-built rental property.

With such a significant undersupply, combined with new measures that will reduce the number of traditional buy-to-let property on the market, Jeremy Blackburn, Head of UK Policy at Rics, has called for a “turbo-boost” in support and investment for the build-to-rent market, regarded as the modern solution for Britain’s rising tenant population.

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