Why Rents Will Rise In 2017Make Text Bigger
The fact that landlords want/need to increase rent to cover increased costs isn’t necessarily evidence that rents will actually rise.
However, there are a number of other important factors to consider, not least of which is supply and demand.
Government policy to reduce investment into property for business purposes (letting) is working. The surcharge on SDLT for second properties has had the biggest impact and I have no doubt that many rental business owners are selling at least some of their properties due to the changes to mortgage interest relief. The will grow exponentially when the real effects of the tax begin to bite.
Whilst the supply of quality rental accommodation has slowed, and may even be going into reverse, the polar opposite is happening to rental demand. It is increasing, and at quite a pace too.
There has been talk of glass ceilings for rents however, whilst the number of people wanting to rent properties continues to grow the outcome is inevitable. Those that can afford to pay more will win. The losers will be those who cannot afford to pay more. If all of those tenants who cannot afford to pay more are displaced by those who can we might ask ourselves where they will live. Will they miraculously be able to afford to buy the properties from those landlords who have simply had enough and chosen to sell?
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