Rents set to rise up to 15% per annum

Permalink: Rents set to rise up to 15% per annum
by Gill Montia

The Association of Residential Letting Agents (ARLA) has published research entitled “The Modern UK Housing Market - Origins and Prospects”, in which it predicts that rents in the private rented sector will rise significantly in the short term.

The report, prepared by Professor Michael Ball of Reading University, forecasts a 10% to 15% rise in rents both this year and next, with stronger demand created by the fact that young people are delaying the purchase of their first home.

The study asserts that the private rented sector is a stablising influence on the UK residential property market because it accommodates those who in the current housing market downturn would be over-stretched borrowers with rising negative equity.

It also concludes that house prices will almost certainly increase faster than commercial real estate over the longer term and that residential property therefore provides better investment potential.

The report estimates the value of properties in the UK private rented sector at over £500 billion.

The figures is ahead of the total of all privately-owned commercial property, including offices, shops, hotels, factories, warehouses and leisure facilities.

According to Professor Ball, the typical UK rental property is a terraced house in an outer or inner town or city suburb.

Only around 13% of such properties were built after 1985, with approximately two-thirds dating from before 1945 but recently modernised.

Finally, the author of the report predicts that affordability problems are likely to continue for those hoping to get a foot on the property ladder, even if the housing supply increases.