Towards the end of 2017 rental dropped for the 1st time in 5 years! Leaving many landlords worrying about their income stream. Across the country the average rent dropped by 0.01%, with average UK rents stabilizing at £1,190pcm, or excluding London £759pcm (figures from buy-to-let lender, Landbay).
This trend is not set to continue, the outlook is for rents to begin to increase in the next few months. Landlords are being placed under increasing pressure with the gradual removal of mortgage interest tax relief, the extra second home stamp duty and the looming tenant fee ban. These measures are encouraging landlords to sell off their rental properties, this could dramatically affect the UK housing market, since a fifth of property is owned by private landlords.
Doug Shephard said; “If landlords are forced to sell up, all property prices will be driven down, leaving the first-time home owners in negative equity and mortgage liquidity hard to find for 1st time buyers.”
Rents have remained low due to the Term Funding Scheme (TFS), a scheme whereby the Bank of England inject cheap capital into banks, coupled with the record low interest rates. However, with interest rates beginning to rise so will rents. John Goodall, CEO of Lanbay stated that, “without a radical house building plan for purchase as well as purpose-built rental properties, rental prices are in danger of soaring over the coming decades”.
This is a worrying time for the young, 41% of millennials never expect to own their own home!
The average young person will rent from the age of 21 to 32, spending an average of £110,830 in rent payments; while those in the capital spend an average of £273,210. However, for those lifetime renters the figures are massive, outside of London the average spend is £1.1 million; and in London they will spend £2.6 million!
Those renting for life and retiring at 68 will need to save for an average of 15 years of rent payments in retirement, therefore spending 44% of average income in rent by the time they reach 82 (average life expectancy).