The Royal Institute of Chartered Surveyors members are predicting that many landlords will pull out of the UK housing market in the next 12 months due to policy changes.
Nearly two-thirds of surveyors interviewed by RICS believed that more landlords would exit the market than join it in the coming year.
“The number of landlords exiting the market due to recent policy changes is concerning, especially given house price rises,” commented Paul Bagust, RICS UK Commercial Property Director. “A functioning private rented sector is crucial to a healthy housing market and it’s predicted that over 20% of all households will be PRS by 2020.”
However, RICS is predicting that private rent rises are likely to outpace house prices due to the recent policy changes – including the stamp duty surcharge. Landlords now face a 3% stamp duty surcharge levied on all newly purchased investment properties. They also face a gradual loss of tax relief on mortgage interest payments.
“The sector is extremely diverse, including many one home landlords,” continued Baghurst. “RICS is part of a sector wide collaboration developing a revised industry-led PRS Code of Practice, to raise standards for both consumers and landlords, bring clarity to those already in the market on various policy measures, and encourage landlords back into a professionalised market.”
Given the likely resulting supply and demand mismatch in the rental market area respondents predicted that, over the next five years, rental growth will outpace that of house prices, averaging 3%, per annum (against 2% for house price inflation).