The latest RICS UK residential market survey suggests that supply issues could lead to rents increasing by 15 per cent by the middle of 2023, especially so in East Anglia and the South West.
This conclusion comes from “resilient” tenant demand (up four per cent in the latest three month period) set against a fall of 22 per cent in new landlord instruction series in the same time period, which the survey suggests is due to tax changes in the buy to let market. “Significantly,” the report says, “the drop in instructions is evident in virtually all parts of the country to a greater or lesser extent.”
Surveyor comments from around the UK remark that small landlords are exiting the market in droves.
Coming to sales, activity continues to be flat, with the newly agreed sales balance remaining “close to zero” for the fourth month in a row. However, the market in the North, Midlands, Wales and Scotland was much stronger than elsewhere.
Mortgage Advice Bureau head of lending Brian Murphy comments: “The remarks in today’s report around the significant drop in private rental stock highlights the impact of Section 24 on landlords, although conversely it does also underscore both ongoing tenant demand and therefore, the opportunity for greater profits from those investors who choose to stay in the sector.
“On the residential sales side, today RICS report supports other recent house price indices in that it appears that the market has broadly remained stable over the last month.
“August is usually one of the busier months in the year for estate agent instructions… whether or not we will see this pattern repeated this year, however, remains to be seen, although clearly buyers are still out there and, not withstanding the interest rate increase last week, mortgages remain highly competitive.”
Resi.co.uk founder and chief executive Alex Depledge adds: “Another stagnant month will come as no surprise to owners looking to move up the housing ladder. Lack of supply and affordability remain a lasting problem for those looking to upsize, creating delays in property chains that means moving, whatever your means, can seem out of reach.”
Bluestone Mortgages director of sales & marketing Steve Seal comments: “RICS’ pessimistic tone should be of no surprise, reflecting the sluggish nature of our current housing market. Whilst it’s great to see more first-time buyers than ever before stepping onto the ladder, what’s choking movement further up is the lack of affordable and suitable housing supply.”