Survey predicting 3% rise in rents next year

Private tenants could feel the squeeze in 2016, as a combination of house price pressure and government regulation sees the attractiveness of buy-to-let properties wane.

The Royal Institute of Chartered Surveyors said it predicted a 6% rise in house prices next year in its annual forecast, outpacing any anticipated increase in incomes.

But the report also picked a 3% rise private rents.

The figures came amid a series of government initiatives intended to help first home buyers, but discourage buy-to-let landlords.

George Osborne announced a 3% stamp duty on buy-to-let property transactions in his Autumn Statement last month. It came after plans to see 400,000 new private-sector homes built, and the roll out of the Help to Buy scheme.

"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", said the institute's chief economist Simon Rubisohn.

He said discouraging buy-to-let properties could see private rents take more of the housing market's strain.

The RICS said a lack of housing stock would be a main driver for the 6% rise in house prices, together with easily accessible credit. The Bank of England previously indicated the unlikelihood of interest rate rises until well into 2016.

It picked the number of house transactions to push up to between 1.25m and 1.3m next year, from 1.22m this year.

"Despite the raft of initiatives announced over the past year, the lags involved in development mean that prices, and for that matter rents, are likely to rise further over the next 12 months", Rubisohn added.

"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."

The institute put its money on East Anglia as leading house price growth in 2016, at 8%, with the North East seeing the lowest rate of increase at 3%. London's price growth was expected to be 5%.