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Graham Awards


Lettings supply to plummet and rents set to rise over next five years

Some broadly good news to end the week - rents are predicted to grow 13.7 per cent in the next five years according to a forecast by Savills.

Alongside a fairly bleak prediction for the sales market between 2019 and the end of 2023, Savills says the rental market will continue to see strong demand, not least because of ongoing difficulties for buyers to obtain mortgages.

This is particularly true in London, where rents will rise by 15.9 per cent according to Savills. 


“Until the market sees a significant injection of Build To Rent stock, rental demand will outstrip supply and rents will rise” explains Lucian Cook, head of residential research for the agency. 

“Investor buyers requiring borrowing are expected to focus on higher yielding markets and this will put further upwards pressure on rents in some of the most expensive rental locations” he adds.

However, Savills does not mince its words on the health of the buy to let sector in terms of supply, saying mortgaged buy to let purchases will plummet 23 per cent by the end of 2023. 

“This will add to upwards pressure on rents, particularly in London, as investors look to lower value, higher yielding markets” notes the agency.

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    13.7% ?? Are they serious? That's nothing over 5 years when supply is contracting so fast.

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    That's just more or less keeping pace with inflation???? So if supply is falling then unless demand falls as well then surely rents must rise faster than inflation

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    There is a limit to how much people can afford so with rent rises there'll be a larger percentage of rent arrears. More complicated that just supply and demand.

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    There is a limit to how much charity landlords can offer tenants so with rent rises there'll be a larger percentage of tenants who don't pay their rent out on the street.

    Landlords, especially if they are highly geared simply can not and will not keep rents low. If they do HMRC would have every right to charge either the tenant or the landlord tax for benefit in kind. If property values continue to drop there will be a rush of landlords rushing to sell and get that mortgage paid off pdq. The same will happen if interest rates go up. The result will be a rash of cheap property on the market that no one wants to buy because it would make a lousy investment for an owner to purchase and a mortgage company to advance a loan. Funnily enough mortgage companies will not deal with non payers either.


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