Renters in the UK can expect their bills to soar by almost a fifth over the next five years as demand continues to outstrip supply, says estate agent Savills.
Tenants will pay 17.6 per cent more by 2029, with rents expected to rocket up by 4 per cent in 2025.
A squeezed private rental stock is set to be overwhelmed by demand over the coming years as beleaguered landlords shun the market due to raised mortgage costs, more red tape and changes in second home stamp duty tariffs.
This decline will continue to reduce availability of private rented properties, pushing up monthly rents.
Tenant demand has reduced from the record highs seen in 2021 and 2022, but is still at elevated levels.
Latest figures show the number of available rental listings per lettings branch was down 16 per cent in September compared to 2018-19 levels, with lets getting snapped up 20 per cent faster so far this year.
Landlords have exited the market in increasing numbers in the past few years due to tightened legislation and sky-high mortgage costs, which have made investments untenable.
Brokers fear more landlords will stop investing following Chancellor Rachel Reeves’s second home stamp duty tax grab at the Budget.
Guy Whittaker, associate director at Savills, says: ‘The increase in the stamp duty land tax surcharge for second homes will likely dampen demand from new buy-to-let investors, and it will prevent some existing landlords from expanding their portfolios.
‘The potential requirement to upgrade energy performance ratings by 2030 may see some leave the sector altogether, particularly in markets where the upgrades required would exceed an entire year’s rental income. In those cases, it may make more sense to sell.’
However, rental growth in some markets could slow as an ‘affordability ceiling’ has been reached, according to Savills. In London, tenants spent as much as 43 per cent of their income on rent in 2023.
But rents in the capital grew by just 1.5 per cent in the 12 months to September 2024, compared to 4 per cent across the nation, as affordability was stretched.
Mr Whittaker says slow growth in London has led to a slight easing of affordability pressures and Savills forecasts 2.5 per cent growth for the capital’s rents next year.
Slightly stronger rental growth of 3 per cent is expected toward the end of the forecast period in 2028 and 2029.
But the capital’s growth in the five years to 2029 is expected to be just 14.2 per cent – 3.4 percentage points lower than forecast growth across the nation.
L.evans@dailymail.co.uk
