Rent rises predicted to triple in 2017 – as landlords pass rapidly increasing costs on to tenants
New stamp duty levys on landlords are likely to be passed on to tenants
TENANTS could be dealt another blow as rent is predicted to triple next year as landlords pass additional costs onto their tenants.
Property investment platform Landbay is predicting that rental inflation, which slowed in 2016, will speed up next year with rents rising three per cent in 12 months - almost triple this year's inflation rate.
The price of rent rose across the whole of the UK by 1.12 per cent in 2016 to November, which is less than the 2.34 per cent from last year.
This lull in prices will not last though, says John Goodall, chief executive of Landbay.
He said: "When you look at the raft of regulatory, political and economic challenges coming to bear on the buy-to-let sector in 2016, it's clear to see why rental growth has slowed this year, but the falls in rents is unlikely to last.
"We expect the tide to turn in 2017."
Mr Goodall has warned the new stamp duty levy on landlords who want to buy properties and a number of other factors are "likely to restrict the supply of rental housing in 2017" and will result in additional costs which will be passed onto tenants.
He added: "Tenants will have little choice but to compete for what properties are on offer.
"As a result we expect rents to rise faster than the pace of inflation next year, with growth tripling to three per cent by the end of 2017."
The company is also predicting that rail projects HS2 and Crossrail 2 will put tenants living along the route under intense rental pressure.
Key HS2 stations in north London have seen rental growth above the overall national average since the projects were confirmed five years ago.
The picture is similar for tenants living near the terminating Crossrail stations.
Mr Goodall added: "Infrastructural investment featured highly in the Chancellor's Autumn Statement and it's clear that the government is counting on HS2 and Crossrail 2 to deliver significant economic benefits to people living in the areas they connect.
"This may well be so, but it will be for naught if a shortage of housing makes the areas unattractive to live in.
"Rapidly rising rents may offset some additional costs for landlords, but if the situation becomes unsustainable this is not good for the housing market as a whole.
"House-building along the route needs to be spread across all tenures, so those in rental market aren't squeezed out by the impacts of the sudden arrival of new transport infrastructure."
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