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Residential buy-to-Let

How is the UK’s rental market likely to react in 2017?

Author: Staff

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The past year has been something of a challenge for the British rental market, with prices falling, taxation rising and the government continuing to hit the market hard in order to try to promote home ownership.

But how is rental property expected to perform in 2017, and will it be a good time for investors to get themselves a footing on the investment ladder? We take a look at a couple of predictions for the 12 months ahead.

How is the UK's rental market likely to react in 2017?

Investment

In recent years, investment in the rental market has been pretty steady, with investors seeing the strong demand and rising prices as a great combination that can make them money for years to come. However, a combination of economic uncertainty and a rise in Stamp Duty charges for investors in the rental market meant that in 2016, there was a drop in investment levels across the country.

In 2017, this is likely to continue, according to the latest reports from the Council of Mortgage Lenders, which expects to see investors’ sentiment damaged further by the fact that the mortgage tax relief rules are being changed. ARLA also said that 37 per cent of its members expect to see a fall in supply over the next 12 months.

But does this mean that it’s actually the right time to invest?

Demand isn’t going anywhere any time soon in the British rental market. Home ownership is at an all time low at the moment and there is no sign that the number of owners is going to get out if its downward spiral in the near future.

So for those who have the confidence to go all in and roll the dice with investment, there is certainly going to be potential for real profits in the next year, because if reports are right and investment does drop, we’re going to see demand outstrip supply, which will lead to an undoubted rise in prices, and income, by extension.

Rental prices

Rental market prices

One of the main reasons it still makes sense to invest in the property market in 2017 is how the rental market is forecast to perform over the coming 12 months. According to reports from most companies towards the end of 2016, rental prices will be likely to increase between two and three per cent.

Savills said that London will be leading the way when it comes to rental demand and prices over the coming year with a rise of three per cent, but prices nationwide will still be climbing to the tune of 2.7 per cent on the back of the fact that demand is climbing and more people are waiting to buy a house, be it because they are looking to rent to fit in with their lifestyle, or because the current political situation means they are waiting to see how things go.

Regardless of the reason, even after a year when there has been a fall of 0.7 per cent in rental prices, experts are predicting that next year is going to be a good one for the rental sector, with income levels for landlords and buyers likely to increase throughout the year.

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