8:45 AM, 24th December 2015, About 7 years ago 2
The Royal Institute of Chartered Surveyors (RICS) has warned that rents could outstrip house prices with tenants paying as much as 25% more in 5 years time.
Chief economist for RICS, Simon Rubinsohn, was concerned that recent government moves to discourage Buy to Let with a cap on mortgage interest relief and increasing stamp duty will significantly reduce supply in relation to demand thus causing increased inflationary pressures on the price of renting.
However, in the short term RICS are predicting house prices to increase faster in 2016 at 6% with rents only increasing by 3%.
Medium term RICS statistical analysis is predicting rental prices to rise an average of 5% per year for the next 5 years and house prices to increase by 4.7% per year over the same period.
Mr Rubinsohn said, “Critically our principal concern with the measures announced by the government is that they are overly focused on promoting home ownership at the expense of other tenures. Discouraging Buy to Let could see private rents take even more of the strain if institutional investment doesn’t increase significantly, particularly given the likely reduced flows of social rent property going forward.”
On the subject of Owner Occupier supply Mr Rubinsohn was more complimentary about policy saying, “Looking further out, there is some justification for taking a more optimistic view of new build with significant incentives being put in place to deliver starter homes. While this may not on its own stem the upward trend in house prices, it could help to slow the rate of growth to something closer to the probable rise in household incomes.”
Below is the RICS 2016 house price forecast by Region:
East Anglia – 8%
South East – 7%
West Midlands – 7%
North West – 6%
Wales – 6%
York and Hum – 6%
London – 5%
Northern Ireland – 5%
South West – 5%
East Midlands – 4%
Scotland – 4%
North East – 3%