Landlords Vanishing Leads to Predicted Soar in Rental Rates According to RICS
The UK property market has shown a slight improvement in July, as reported by the Royal Institution of Chartered Surveyors (RICS). This recovery comes amidst a more challenging landscape in the rental sector, where the gap between demand and supply is widening, suggesting potential rent increases.
According to Nationwide, UK house price growth reached a 19-month high in July. This positive trend was also reflected in Halifax's report, which showed a 0.8% increase in house prices last month. The market's optimism was further fuelled by the Bank of England's interest rate cut, a move that many estate agents and surveyors correctly anticipated.
Sarah Coles, head of personal finance at Hargreaves Lansdown, noted that estate agents have faith that interest rate cuts will revive the market. In fact, more respondents expect market activity to increase in the months ahead. Zoopla recently stated that the property market is heating up, and sales expectations are now at their strongest since January 2020.
However, the rental market is not as optimistic. With many buy-to-let landlords looking to exit the market due to rumours of a possible capital gains tax hike, the number of tenants continues to rise. This imbalance could lead to increased rents, as predicted by RICS members.
Simon Rubinsohn, chief economist at RICS, commented that the policy mix is becoming more supportive for the sector. The new government's focus on boosting housing development and the recent interest rate cut are factors contributing to the improved positivity in the housing market.
Despite these improvements, Rubinsohn also noted that the difficulties in the lettings market remain intense with little prospect of any relief in sight. The full impact of the interest rate cut and housing reform announcements will not be evident until next month's RICS report.
RICS expects house price falls in most UK regions to turn into increases, a positive sign for the overall market. However, the rental market remains a concern, with landlord numbers falling and the number of tenants rising. This imbalance could lead to increased rents, a trend that has been observed in recent months due to post-pandemic economic recovery and changes in housing policies.
In conclusion, while the UK property market shows signs of recovery, the rental sector faces challenges. It is essential to monitor these trends closely to understand the broader implications for the housing market in the coming months.
