New 2022 research, analysed by LandlordBuyers.com, shows that UK rental prices have increased by 12.3% since January 2015.
With a rise in UK house prices post-lockdown, the rental market continues to remain as busy as ever. The question is: are private rental prices too high and out of reach for this generation of tenants?
- Private rental prices paid by tenants in the UK rose by 2.0% from January 2021 to January 2022
- Private rental prices grew by 2.0% in England, 1.4% in Wales and 2.6% in Scotland from January 2021 to January 2022
- The East Midlands saw the highest annual growth in private rental prices (3.6%) while London, for the second year running, saw the lowest (0.1%)
LandlordBuyers.com Managing Director, Jason Harris-Cohen, said:
“Two things go hand-in-hand when it comes to explaining the rise in rental values – the dwindling number of properties available to rent and the astronomical rise in property values.
It comes as no coincidence that the additional 3% stamp duty land tax on the purchase of second homes, including buy-to-lets, was announced in 2015. This prompted landlords to question their future investment activity and the first asset disposal flurry was seen.?
The Government announced, just three months later, that tapering on mortgage interest tax relief would be introduced – just as landlords had adjusted to higher stamp duty bill. This disadvantageous move started in April 2017 and made its final impact in 2020 – coinciding with accelerating rental values. There is a pattern of landlords exiting the buy-to-let market around these two flashpoints and the maths is simple – the fewer properties there are to rent, the more costly the remaining rentals become.
Then we have the issue of property values.?The price of the average UK house increased 10% in the year to November 2021, according to Land Registry data, and this has tempted more disgruntled landlords to cash in while the market is at its peak. Their exit has further compounded faltering rental stock levels in the face of rising renter demand, and rents have been pushed up further as a result.
The wider political and financial outlook will also impact how many renters can make that transition to home ownership. Inflation, soaring energy prices and rising interest rates will take over from Covid concerns, potentially thwarting thousands of home moves and keeping tenants in rented accommodation for longer. The net result of all of the above sounds ominously like higher rents are here to stay
