Rents to rise 15% in five years

Rents to rise by 15% by 2023
A shortfall in supply is expected to force a rise in rents of around 15% by 2023

According to the latest report by the The Royal Institution of Chartered Surveyors (RICS) rents could increase by 15% by 2023, due to a shortfall in supply.

The shortfall is due in large part to tax changes for buy-to-let investors who can no longer offset all their mortgage interest against their profits, resulting in higher taxes.

The latest RICS report shows new landlord instructions in the latest three month period has slipped to a net balance of -9%. This is the ninth consecutive quarter in which this indicator has recorded a negative number.

Simon Rubinsohn, RICS Chief Economist, said: “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.”

Over the next twelve months, rents are projected to increase by almost 2 per cent nationally, with East Anglia and the South West seeing the sharpest growth over the period.