An imbalance of demand and supply will continue to ensure positive rental price growth in 2023, according to Nicky Stevenson, MD of Fine & Country UK.
Assessing what’s in store for private lettings in the next 12 months, Stevenson believes it will be a continuation of the growth seen in 2022.
“Annual rental price growth across England and Wales is currently 9%,” she explained. “Apartment price growth is outpacing that of houses, at 11% versus 8.2% respectively. High levels of annual price growth in the prime markets of England and Wales are driven by activity in the capital.
“With the exception of the South East, at £3,792 the threshold for a premium market rent in London is more than double that of any other region. During 2022, 90% of all new rentals of £3,500 per month or more have been in the capital, of which 65% were apartments. Across the remainder of England and Wales, 94% of such rentals were houses,” Stevenson added.
However, while she expects the rental market to remain busy, the MD anticipates that the level of price growth will moderate over the course of this year.
“With higher mortgage costs set to impact profit margins, UK Finance predicts that £13bn will be lent to buy-to-let landlords for new purchases over the course of 2023 and £30bn to landlords looking to remortgage,” she said. “Both are significantly lower than in 2021 and more in line with pre-pandemic levels.
“Taxation and legislative change is once again on the government’s agenda, with changes to Capital Gains Tax to come into effect in April. The Renter Reform Bill is set to be introduced by the end of this parliamentary session in May 2023, although it will take longer for the Bill to become law,” Stevenson concluded.
Good assessment. My only concern is the gap between low income and higher paid is growing at an alarming rate which has three consequences (always been there) more likely to be more than obvious than ever before…….
1. Many will be priced out permanently!
2. Rents will eventually peak as all do not have a bottomless pit of finances = Boom and bust, resulting in landlords rents dropping to chase the tenants and the mess that will create with existing higher paying tenants wanting reductions. No different to sales boom and bust. This is where landlords need to be extremely street wise on affordability or get very badly burnt.
3. These are not exact figures but paints the picture. Home ownership to rent market was 90% : 10%. Today is something like 60% : 40%? The future holds 40% : 60%, with current financial outlooks of incomes/cost of living/home ownership prices. The stark reality will be that many more than ever will be caught in the rent trap, never able to get out.
Now item 3 to a certain extent gives some expectations that landlords could see their investment in the future could be a sound investment. However the increasing demonising of landlords and draconian regulations where it is not needed, out ways the positive in the current political climate. Scotland considering rent capping, others would follow. No sensible financial assistance given to landlords is on the horizon, only more tax/net deductions/overheads and autocracy.
Government is not and never likely to provide adequate social housing which would require a massive change in political direction, no matter which party. They all say build, but none of them have! Don’t forget devolved powers in Scotland, Wales and Northern Ireland are not conservative run for decades are responsible for their own housing needs. AND WHAT DO THEY ALL DO ….. chasing landlords out of the market, making the situation worse and a misery for many tenants at the lower end of affordability.
Its going to get worse for tenants.
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