Will Rents continue to increase in 2020?

The rental market is a volatile place at the best of times and with the government focusing more and more on this industry in a move to make it fairer and more effective there has been a significant increase in regulations which have had quite an impact on the market. Added to this, the increasing costs associated with buying a home, means that demand for rental properties is remaining buoyant. In this article we will take a look at what predictions property experts are making for 2020 and beyond.

ARLA Propertymark suggest that the majority of letting agents think rent prices will increase in 2020, with demand rising and the number of landlords operating reducing due to the increasing complexity and cost of the new Regulations. This, they predict, will force up rents and reduce choice for tenants.

Zoopla agree with this prediction and they say that, due to a lack of supply for rental properties, rents will likely increase by 3.5% over 2020. Richard Donnell, Research and Insight Director at Zoopla said “We expect rents to increase by 3.5 per cent over 2020 as a lack of supply supports faster growth. With further policy changes expected from the government to provide more security of tenure for renters we expect the supply of rented homes to remain constrained, which will support rental growth over 2020. With robust earnings growth, the impact on rental affordability will be muted.”

In an article on LettingAgentToday, The Royal Institution of Chartered Surveyors state “As the sector continues to struggle with a lack of supply, the RICS survey data suggests rents will rise by 2.5 per cent.” With them predicting London rents will increase by 3 percent.

The Chief Executive of HomeLet, Martin Totty, is also suggesting that the supply of properties in 2020 might become even tighter due to the ever tightening legal framework and should that happen, rents will follow the normal supply and demand curve and inevitably increase.

The fear of supply reducing is not unfounded and research by Simply Business suggests that 26% of landlords  plan to sell at least one property in 2020 which means that potentially 250,000 homes could be taken off the rental market. In addition, 82% of landlords are not planning on buying a new investment property in 2020. This is all on the back of reduced returns and increasing regulation. 

Clearly these are all simply predictions and nothing is certain in this every changing and fluid market but all the pointers are suggesting that rent prices will continue to increase in 2020.

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