04:11PM, Monday 03 September 2018
Rents could rise 15% by 2023 as the supply of new rental properties dries up, according to a survey by the Royal Institution of Chartered Surveyors (RICS).
It said small scale landlords are pulling out of the market and blamed tax changes brought in last year which have made buy-to-let investments less profitable.
Government reasoning behind the tax changes was to make more houses available to homebuyers.
RICS said it was time that the government looked again at the way the private rented sector was regulated.
It said its members have seen the supply of new rental property falling consistently for two years.
Meanwhile, the majority of its members are seeing steady increases in the number of people looking to rent.
Simon Rubinsohn, RICS chief economist, said: “The impact of recent and ongoing tax changes is clearly having a material impact on the buy-to-let sector as intended.
“The risk... is that a reduced pipeline of supply will gradually feed through into higher rents in the absence of either a significant uplift in the build-to-rent programme, or government-funded social housing.”
He said: “Ultimately, government must consider the impact of its policies, and if the wish is to move away from the private rented sector [PRS], it must provide a suitable alternative.
“If they wish to improve PRS, as we have suggested by professionalising through regulation and the PRS code, there is justification to reconsider the approach taken to tax.”
Meanwhile the Office of National Statistics (ONS) published figures last week showing that annual house price growth is at its lowest level since August 2013.
According to the figures average house prices in the UK increased by 3% in the year to June 2018 – down from 3.5% in May.
Former RICS chairman Jeremy Leaf had this to say: ” Price drops reflect a new realism in the market – if you want to sell your property, it needs to stand out and price is the obvious way of doing it.
“Nevertheless, we are seeing more interest in property coming on the market as buyers can only hold off for so long and realistic sellers are recognising the changed market conditions.
“This is an encouraging sign and hopefully will be reinforced when many of those currently on holiday return to bolster the traditionally busier autumn market.”