UK Rents Expected to Increase by 4% In 2023
A recent report by the Royal Institution of Chartered Surveyors (RICS) indicates that the UK's rental market is set for a 4% increase in rent prices in the next 12 months.
The report highlights multiple factors driving this increase, including rising mortgage rates, a lack of available housing, and increasing energy costs.
Demand for Rental Properties
High mortgage demand makes it challenging for first-time buyers to step onto the property ladder. It has led to a surge in demand for rental properties, pushing up average rents. The market is also experiencing an exodus of landlords, resulting in a lack of available housing and high rents, especially in sought-after locations.
The rising energy costs have led to landlords factoring these costs into their rent prices. As a result, rent prices are exceeding inflation, affecting tenants' wallets.
The government has implemented regulations such as the new energy efficiency targets, which require landlords to upgrade the energy efficiency of their buy-to-let properties to a rating of 'C' within five years.
The upgrade cost is considerable, and landlords who do not comply face fines of up to £30,000. The Renters Reform Bill is also being considered by the government, containing radical plans for the housing industry, which may result in changes that affect the rental market.
The combination of the factors highlighted in the RICS report will drive up rent prices in the UK over the next 12 months. The rental market's future looks uncertain, and there is a need for a balanced approach to ensure that both landlords' and tenants' interests are protected.