Rents across the new UK are set to rise much more quickly than property prices and people's incomes, according to a new report.
The Royal Institution of Chartered Surveyors (RICS) says that house prices are set to rise quickly though rents are to rise even quicker. The organisation points to tenants currently living in privately rented accommodation as bearing the brunt of tax increases which buy to-let-landlords will have to meet.
RICS says there is a growing fear that because of these increases there will be a drop in the supply of rental properties which will, in turn, push up rents. Indeed, RICS is now predicting that rents in the UK will rise by 4.7% on average year-on-year over the next five years. In comparison, they say that house prices will rise by 4.1% over the same period.
However, the survey isn’t the only news for tenants since the latest HomeLet Rental Index also points to a rise in the cost of new tenancies. The index reveals that outside of Greater London, new tenancies rose by 4.4% in the three months to May.
The biggest rental price growth was seen in Scotland where prices grew by 10.6% year-on-year, followed by rents East Midlands which rose by 8.3%. Tenants in London have seen the average rent rise by 6.2% and they now stand at an average of £1,563 a month.
The index is published by Barbon Insurance and its chief executive, Martin Totty, said: “The index continues to show that rents have seen a steady growth and the number of tenants who are looking for property is ahead of supply - and that's the picture in most regions of the UK.”
Judicial review gets £10,000 boost
Meanwhile, the National Landlords' Association (NLA) has revealed that it has donated £10,000 to help the Judicial Review against the move to remove a buy-to-let landlord’s finance costs. The removal of finance costs will limit the rate that landlords can claim mortgage relief to the basic rate of income tax, regardless of their tax status.
The NLA's chairman, Richard Lambert, described the donation as a 'goodwill gesture' and hopes the judicial review would deliver a positive outcome to help the thousands of buy-to-let landlords who are currently in jeopardy.
This is the first donation made by the NLA to the campaign and the removal of finance costs will be brought in from April next year. Mr Lambert also describes the law to curtail the amount landlords can claim against tax as a “disastrous” government policy.