Rents in the UK are projected to increase by nearly 18% over the next five years, according to a recent forecast by Savills. This rise is expected to surpass the anticipated 15% growth in average incomes during the same period, intensifying affordability challenges for tenants.
In London, renters are already allocating almost half of their monthly income to housing costs.
The bump in rental prices is primarily attributed to a persistent imbalance between supply and demand. The Royal Institution of Chartered Surveyors (RICS) reports that while tenant demand remains high, the availability of rental properties continues to decline.
This shortage is exacerbated by landlords exiting the market due to increased mortgage rates, regulatory changes, and tax adjustments.Data from Zoopla indicates that in some regions, up to a third of homes listed for sale were previously rented out within the past four years.
Further pressures on the rental market include proposed government regulations requiring all rental properties to achieve an Energy Performance Certificate rating of C or above by 2030.
This mandate may prompt additional landlords to sell properties rather than invest in costly energy efficiency upgrades, potentially reducing rental supply further and driving rents even higher.
The combination of these factors suggests that tenants may face continued financial strain in the coming years, with rental costs outpacing income growth and a diminishing pool of available properties.
