The renting sector is a significant part of any country’s economy and serves the housing needs of many people whose financial situation is unsuitable for homeownership.
With the recent tax changes in the buy-to-let market, however, the number of rental properties is decreasing while the demand remains high, driving up rental costs.
An excellent article by Simon Rubinsohn features details on an RICS survey addressing the issue and its implications on current and future tenants.
At the end of the blog is the link to their page which is well worth a read.
Unless changes are made to buy-to-let market, tenants could see their rents rise by as much 15% by 2023.
That’s according to a new survey by the Royal Institution of Chartered Surveyors (RICS) which found that the number of new instructions of properties for rent has fallen a further 9%.
That means there is now a continued decrease in the availability of rental properties, yet the demand seems as resilient as ever.
RICS have suggested that the recent tax changes that the Government have brought into the market are responsible for pushing more buy-to-let landlords out of the market.
Over the next twelve months, rents are projected to increase by a little short of +2% nationally, but the shortfall in supply over the medium term is expected to force a cumulative rise of around +15% (based on three month average of responses) by the middle of 2023.
With things looking grim for those who rent rather than own their own home, RICS have called on the Government to take action and look again at the way the private rental sector is regulated.
Simon Rubinsohn, RICS Chief Economist, explained “The impact of recent and ongoing tax changes is clearly having a material impact on the Buy to Let sector as intended. The risk, as we have highlighted previously, is that a reduced pipeline of supply will gradually feed through into higher rents in the absence of either a significant uplift in the Build to Rent programme or government funded social housing.
“At the present time, there is little evidence that either is likely to make up the shortfall. This augers ill for those many households for whom owner occupation is either out of reach financially or just not a suitable tenure.”
Time will tell just how accurate these predictions are but there certainly appear to be problems mounting for tenants over the coming years.