Property Analysts Predictions for 2017
Now that we’re well and truly into 2017 no-one can blame buy to let landlords for attempting to forecast ahead to try and predict how the next 11 months or so are going to pan out.
It hasn’t been an easy ride for them over the past couple of years, after all. Thanks to the three per cent stamp duty hike on additional properties and the reduction in ‘wear and tear’ landlord tax expenses, this year hasn’t got off to a good start. Then there’s the PRA plans to tighten up on mortgage lending.
So, despite all the turmoil, is there any good news ahead for landlords to look forward to? Here’s what some buy to let experts from all sides of the industry believe:
Rents will undoubtedly rise
Given the poor state of the rental market nationally in terms of demand well exceeding supply, not to mention the aforementioned financial penalties on landlords, it’s no surprise really to find that most property professionals predict rents to rise.
In fact, there are some property analysts who believe rent hikes could be as much as 10 per cent in 2017.
David Cox, managing director, ARLA, added that the scrapping of Estate Agency tenancy fees made this even more likely.
“Many [estate agencies] will need to recoup the costs elsewhere and this will inevitably be through higher rents, ensuring that 2017 is a pretty raw year for tenants too,” he said.
A recent poll by ARLA on estate agents showed that 80% predicted rents would rise during 2017.
RICS recently pointed out there would be a potential 1.8m shortfall in rented properties soon. Accountants PwC meanwhile suggests that by 2025, 7.2m households in the UK would be rentals – compared with 5.4m two years ago 2015 and 2.3m in 2001.
North London estate agent, Jeremy Leaf, said he expected rents to rise faster than house prices this year, thanks to the fact fewer landlords were looking to expand their portfolios.
Upad founder James Davis predicted that more landlords would be self-managing as a result of ban on letting agency fee. But he also warned tenants may find difficulties paying their rent this year in the event of rent hikes, adding: “With pay increases at an average of 1%, inflation at 2% and rents increasing 5%, there is a growing void between what tenants can afford with their pay.”
Davis could be right, considering a recent HomeLet Rental Index report for the last six months of 2016 showed that in terms of renting the UK was beginning to approach “an affordability ceiling.” The average rent in London is already sitting at £1,508.
Landlords ‘stick with it’
Despite the predictions of landlords fleeing the buy to let market in droves, many are digging their heels even deeper in. The last quarter of 2016 resulted in a 10 per cent rise in buy to let mortgage lending at 38 per cent compared to the previous three months. This was according to the most recent Mortgages for Business’ buy-to-let index. And that can only mean one thing – happily, buy to let landlords are here to stay.
Keep up to date our blog and social media channels to find out what’s happening in the UK property market. See www.avrillo.co.uk.
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