Amidst a challenging era for renters in the UK, the property market is witnessing a significant shift. The Royal Institution of Chartered Surveyors (RICS) has released data indicating a concerning trend – a decrease in the number of properties available for rent, leading to a surge in demand and subsequently, rising rental prices. Here’s a breakdown of the key insights from the latest survey:
- Landlord Instructions: The survey revealed a notable decline in landlord instructions, with a net balance of minus 29 percent in the three months leading up to October. This drop marks the lowest reading since 2021 and signifies a worrisome trend for those seeking rental properties.
- Tenant Demand: In contrast to dwindling supply, tenant demand remains strong, with data showing a 19 percent increase. The significant gap between supply and demand in the market has prompted 33 percent of surveyors to anticipate a rise in rental prices in the upcoming quarter, indicating robust price growth.
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Market Dynamics: Factors such as the immediate increase in stamp duty for landlords acquiring rental properties, as announced in the Budget, may impact the supply landscape. While this policy change could potentially address the shortage of rental homes, it also poses challenges for landlords, many of whom are already facing increased costs that impact their profitability.
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Rental Price Growth: The surge in demand has driven rental price growth, with figures peaking at 9.2 percent in March – the highest since records began in 2015. Although the growth rate slightly eased to 8.4 percent in September, the cost of renting a property remains high, consuming 30 percent of renters’ gross income.
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Market Outlook: Despite these challenges, the property market continues to exhibit resilience. House prices have seen a steady rise, supported by an increasing number of new buyer enquiries. The growth in buyer activity has fueled the house price index, indicating a sustained expansion in the market.
As rental stock continues to shrink and rental prices soar, the pressure on tenants persists. It remains to be seen how policymakers and market participants navigate these challenges to ensure a balanced and sustainable rental market in the UK moving forward.
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