Rents will continue to rise as more people enter the rental market with fewer properties to choose from, the professional body for surveyors has said.
Demand for rental properties rose “firmly” over the three months to July, according to research from property professionals, the Royal Institution of Chartered Surveyors (RICS), marking the strongest quarterly pick up in demand since the start of last year.
At the same time, most surveyors said instructions from landlords further decreased, resulting in an imbalance of demand and supply.
The majority (63%) of the surveyor respondents to the RICS residential market survey expect rents to go up again in the coming three months.
Such a high percentage expecting an increase is a fresh record high with data going back to 1999.
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Renters are becoming more vulnerable to interest rate rises than mortgage-holders
Tenant demand had already reached a five-month high amid a “frenzied” lettings market back in April.
Rents are now reaching an affordability “tipping point” with no sign of them reducing any time soon, one respondent said.
Analysis from Sky News showed renters are now in the majority in the UK, with people owning their home outright the second largest group, followed by mortgage holders in the minority.
“Demand shows no signs of letting up, supply remains constrained and that means rents are likely to continue rising sharply despite the cost of living crisis,” RICS chief economist, Simon Rubinsohn, said.
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Squeeze on renters is symptom of Britain’s housing crisis
Interest in buying property fell, the survey showed, as 44% of respondents noted a decline in agreed sales during July, the weakest reading for the sales measure since the early stages of the pandemic.
Instructions to sell homes also fell, despite mortgage bills becoming more expensive for many due to Bank of England rate hikes to reduce inflation.
The average rate on two and five-year fixed deals has surpassed 6% with an estimated 2.4 million mortgage holders needing to fix a new deal by the end of 2024, according to UK Finance, the banking industry trade body.
House prices have been falling as mortgage rates have risen and housebuilding activity has slowed.
The effects of that fall were seen when major UK homebuilder Bellway announced plans to cut jobs and close sites.