The cost of renting should inflate in the months ahead due to a shortage of landlord purchases combined with stronger tenant demand, the RICS UK Residential Survey has revealed.
A net balance of +22% surveyors saw stronger tenant demand in May, while a net -34% saw a reduction in landlord instructions. As a result, a net +43% expect rents to rise in the months ahead.
Zoopla research put the current level of annual rental inflation at 2.8%, which is the lowest rate since July 2021.
Tarrant Parsons, senior economist at RICS, said: “Sentiment across the UK residential property market remains somewhat subdued, with ongoing uncertainty around global trade policies and the dampening effect of transactions being brought forward ahead of the Stamp Duty changes at the end of March continuing to weigh on buyer activity.”
A net balance of -26% of survey participants reported a fall in new buyer enquiries in May, which is the fifth consecutive month of decline.
Agreed sales also continue to edge lower, returning a net balance of -28%.
In terms of house prices a net -8% saw a reduction. However a net +34% expect them to rise in the next 12 months.
Simon Rubinsohn, chief economist at RICS, said: “RICS welcomes this week’s announcement of the government’s commitment to a longer-term affordable housing settlement. This should provide greater certainty and support more strategic delivery.
“The creation of a new housing finance vehicle via Homes England is also a potentially important step in boosting supply, particularly if it improves access to funding for smaller developers. Together, these measures could help address the UK’s chronic supply shortfall and support broader economic stability.”
“Importantly, today’s announcements also build on the planning reforms announced earlier in the year, reported to be assessed as adding £6.8 billion to the economy. These new policies highlight the wider economic gains that could flow from an overall better functioning housing market.”