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What could current market conditions mean for rents?

The year appears to have started in a buoyant mood for the UK property market.  Rightmove has seen an increase in asking prices; The Royal Institution of Chartered Surveyors claim increased confidence amongst its members and the National Association of Estate Agents (NAEA Propertymark) have reported that property sales and mortgage approvals have risen.  Finally, after years of political and economic uncertainty, all indications are that the decisive result of the 2019 General Election appears to have injected some much-needed confidence into the market.

However, the reality is that house price growth means homeownership is likely to continue to elude the younger generations, and those earning lower salaries. 

Even with promised investment into social housing, it is likely that several years will pass between plan and completion. Indeed, not everyone who wishes to rent a home is eligible to, or indeed wants to, rent a social home.

Therefore, we can only predict that demand for private rented homes will continue to increase further as we move into the new decade.

Meanwhile, whilst there were some well-meaning and logical reasons why the government introduced reforms into our sector over recent years, some of the changes pushed costs up. As a result, some landlords felt they had no option but to sell up and leave the sector, which only put pressure on supply.

But the millions of landlords who remain are set to enjoy even greater returns from their investment. Not just because the overall value of their portfolio is likely to improve, but also because there’s widespread belief that rental prices are set to grow in the next five years, with some predicting growth as high as 15%.

We don’t believe that rents will spiral out of control.  However, what we are expecting to see is a ‘perfect storm’ for rental prices: increased demand, reduced supply and a necessity for landlords to cover increased costs.

Therefore, all indicators are that the current market conditions appear to offer some positive prospects for the private rented sector.






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