UK rents are forecast to rise by an average of 16.5 per cent by the end of 2020 according to Savills.
In its annual five year forecast, Savills say rental affordability is already so stretched for many households that rental growth will in effect be held back by simple affordability.
The agency goes on to say households in the private rented sector already pay more as a percentage of their income than those living in other tenures, with many reliant on housing benefit or living in larger household groups to make the tenure more affordable.
It forecasts that the traditional rental demographic of sharers and young professionals looks set to continue growing; as the cost of buying prevents people from making the move into homeownership. This is backed up by further research showing the rental market looks set to benefit from first time buyers currently needing on average a minimum household income of £50,000 to purchase a house in the UK.
Savills also state that in some high demand/low supply rental markets, more people may live in larger household groups – flat sharing is no longer an option but a necessity for many. We’re certainly seeing evidence of this at both our Oakham and Kettering offices as young professionals look to combine their spending power and rent larger properties but live together, similarly demand for larger properties is driven by young families.
For those with houses or units with 2 or more bedrooms there would seem to be strong likelihood of rental growth in the next couple of years.