Rents to rise 25pc over next five years while house prices continue to grow, RICS reveals

Rents in the UK are expected to rise 25% in the next five years while house prices are set to increase 20%, according to widely followed survey on Thursday.

The Royal Institution of Chartered Surveyors said landlords are likely to increase their rents as they scale back on their portfolios.

The buy-to-let market has become less attractive to landlords since the government hiked stamp duty on these purchases.

In the three months to January, demand for rental properties continued to outstrip the supply of homes. The RICS survey indicated that the imbalance between supply and demand is expected squeeze rents higher.

Meanwhile, the survey also showed UK house price growth in January accelerated. The RICS house price balance rose to 25% last month from 23% in December, beating expectations of 22%.

However, central London reported its eleventh consecutive monthly price decline, as the premium property market comes under pressure amid concerns about Brexit and high purchase taxes.

Looking ahead, prices are expected to continue to rise over the next three to 12 months in all regions across the UK, apart from central London.

The survey comes after the government released a housing white paper outlining its strategy for solving the housing crisis. It laid of plans for accelerating construction of new homes and building more affordable homes to rent.

“The scale of the challenge government faces as it announces its new approach to housing is clearly demonstrated in the results from our latest survey,” said RICS chief economist Simon Rubinsohn.

“Not only are the headline price and rent series pointing to further increases over the course of this year, but more significantly, the medium term view of RICS professionals working up and down the country is that both house prices and rents will over the medium term continue to grow at a faster pace than wages putting even greater pressure on affordability.

“Whether the measures announced can ease this this trend remains to be seen.”