UK rents still rising

The latest lettings market snapshot, from the Royal Institution of Chartered Surveyors (RICS), suggests there will be rising rent prices for the next 12 months.;
Rising

The latest lettings market snapshot, from the Royal Institution of Chartered Surveyors (RICS), suggests there will be rising rent prices for the next 12 months.

RICS report

The RICS report, which measures demand and supply for surveyors, says tenant demand remains firm as we move into the summer months.

The report is based on a monthly survey. It forms a clear picture of what the surveyors are seeing, at the time.

This month’s report has seen further demand from tenants.

In May there has been a reported +48% net increase, slightly less than the +56% that was reported at the end of April.

New landlord instructions, however, remained in the negatives for the 10th consecutive month, as purchase prices remain inflated.

The report went on to say:

“On the back of this, a net balance of +55% of respondents foresee a pickup in rents over the near term. Over the next twelve months, contributors continue to pencil in around 3% growth in headline rents. Meanwhile, the outlook appears to be recovering somewhat in London, with both the three and twelve-month rental growth expectations series moving into positive territory”.

RICS predicts 3% rental growth

If true, this predicted rental growth will mean a sharp rise in rental prices.

The Office of National Statistics (ONS) reported back in May, that private rental prices grew in England by 1.6%, in the 12 months leading up to April 2021.

A 3% increase within the next 12 months would shake up the PRS considerably.

With tenants struggling to be able to get on the property ladder because of rising house prices, demand for rental accommodation is currently outweighing supply.

It will be interesting to compare this data, following the next ONS house price index release, later this month.

Homelet predicts 4% rental growth

Tenant referencing and insurance supplier, HomeLet, released their own index last week. Their report shows rental increases even higher than those predicted by the RICS.

Their data shows the average UK rental price is up 4%, to £997 per calendar month. If London is excluded from these figures, this rises to 6.4% at £854.

HomeLet & Let Alliance Chief Executive Officer, Andy Halstead, commented:

“We’ve seen from sharp house price spikes across the country that the Coronavirus pandemic changed what people are looking for in a property.

“Rental properties continue to play a crucial role in meeting the demands of people up and down the country, and the flexibility and responsiveness shown by the private rental sector will be vital in the coming months as the country opens up again. As rents increase, we’ve also seen an increase of over 10% in suspicious and fraudulent applications for let property; with backlogs and delays in processing evictions, the demand for high-quality tenant reference and insurances has never been higher.

“The overwhelming success of the vaccination drive brings hope that returning to some form of normality could be on the horizon. However, we would still caution that millions could be made unemployed at the end of the furlough scheme, posing considerable problems in tandem with an unbalanced rental market. Whilst the Government looks to stimulate homeownership, the importance of the private rented sector can’t be understated and should not be overlooked.”

These two significant sources of data bear good news for landlords, whose service is clearly very much needed.

This information should not be interpreted as financial advice. Mortgage and loan rates are subject to change.