Rents forecast to rise faster than house prices during next five years

Rents are expected to push up faster than house prices over the next five years as landlords scale back the number of properties on their books, according to a survey.

The Royal Institution of Chartered Surveyors (Rics) said rental prices are predicted to outpace house price inflation, as an imbalance between supply and demand squeezes rents higher.

Over the coming five years, surveyors anticipate rents will increase by just over 25%, while house prices rise by just under 20%.

Rics found a net balance of 28% more surveyors feel landlords are likely to decrease rather than increase their portfolios over the next 12 months and over the next three years a balance of 26% expect landlords to scale back their portfolios.

This could push rents higher as tenants would be competing for fewer rental properties.

Rics said a lack of listings coming to the lettings market could become a bigger issue in the years ahead as a recent stamp duty hike for landlords and other tax changes diminish the attractiveness of buy-to-let as an investment.

The survey was conducted before the release of the Government's white paper this week, which contained plans to boost the rental sector, including making it easier for developers to offer affordable private rental homes and offering renters more long-term "family friendly" tenancies.

Jeremy Blackburn, Rics head of policy, said ministers had listened to Rics' views on giving the private rental sector more priority alongside owner-occupation. He said supply in the market needs a "turbo boost".

Rics' survey also found that house prices continued to edge up across the UK in January, with a balance of 25% of surveyors reporting prices rising rather than falling.

House prices are expected to continue rising across most parts of the UK over the next 12 months, with the exception of London, where expectations have turned slightly negative, the survey found.

Property values in central London have been generally falling for several months, but most other parts of the UK have continued to see prices rise, with the North West and the South West of England and Northern Ireland seeing particularly strong growth, according to the survey.

Rics said the number of properties for sale across the country remains close to historic lows. Meanwhile, a net balance of 5% of surveyors reported an increase in demand from home buyers rather than a fall.

Simon Rubinsohn, chief economist at Rics, said: "The scale of the challenge the Government faces as it announces its new approach to housing is clearly demonstrated in the results from our latest survey."

A Department for Communities and Local Government (DCLG) spokeswoman said: "This Government is determined to make housing more affordable and secure for ordinary working families and have a rental market that offers much more choice.

"Measures in our white paper will get more rental homes built and provide more security for renters so that this is a country that works for everyone."

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