It is just another day full of bad news for the people of the United Kingdom, as nearly two-thirds of surveyors said that more landlords will exit the UK housing market than will join it in the upcoming year. It is not surprising, considering the market has been in its worst slump in recent history. There are a lot of mitigating factors that led to this decision to leave the market, but one thing remains true, it will not help the people that rent from those landlords.
Once the landlords leave the market, they will be free to raise rent prices as they please. According to the Royal Institution of Chartered Surveyors (RICS), private rent rises will outpace house prices in the next five years. One of the reasons that landlords are so adamant about getting out is the new 3% stamp duty surcharge levied on newly-purchased second homes. These surcharges were implemented in part due to the concerns that first-time home buyers were constantly being outbid by landlords. RICS has predicted that rent costs will rise at 3% per year for the next five years, as opposed to the annual 2% increase in house prices.
The RICS has found that property buyers have had little interest in purchasing homes in the UK for quite some time. In fact, the market has been static for nine months now. The surveying company did find that house prices were rising in many areas throughout the UK, such as Northern Ireland, Scotland, North West of England, and the South West of England; however, prices have fallen in central London and will continue to fall for the next three months. With little demand in the market, it makes sense from the landlords’ perspective to raise rent prices, considering no one is leaving to purchase their own home anytime soon.