Private Rents to Soar Nearly 20% in Five Years: What It Means for Property Investors

Why Are Private Rents Set to Rise?

Private rents in the UK are forecasted to increase by 17.6% by 2029, according to leading estate agent Savills. This surge is driven by a persistent imbalance between supply and demand. Despite a slight easing from record-high tenant demand in 2021 and 2022, the number of rental properties remains critically low, with rental listings down 16% compared to pre-pandemic levels. Properties are being let 20% faster than in previous years, underscoring the intense competition among renters.

Challenges Facing Landlords

Many landlords have exited the market due to rising mortgage costs and stringent regulations, making buy-to-let investments less viable. Recent changes, such as the stamp duty surcharge for second homes, introduced by Chancellor Rachel Reeves, and looming energy efficiency requirements, are likely to discourage further investment. For some landlords, the costs of upgrading properties may exceed an entire year's rental income, prompting them to sell instead.

London’s Rental Market: Slower Growth, but Still Rising

While rents across the UK are expected to climb significantly, London's market shows a slower growth trajectory. Tenants in the capital currently spend around 43% of their income on rent, creating an affordability ceiling. Savills predicts London rents will rise by 2.5% in 2025 and 14.2% overall by 2029, slightly below the national average.

What Does This Mean for Buy-to-Let Investors?

For property investors, the forecasted rental growth offers opportunities despite the challenges. Savills notes that rental growth could moderate as affordability pressures increase. However, savvy investors who navigate the current market conditions, such as focusing on energy-efficient properties or leveraging areas outside London, may still find lucrative opportunities in the buy-to-let sector.

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