According to Greycoat Real Estate, there is room over the next year for growth in property rental prices. They say renters should expect rents will increase by 6% in 2024 because the demand for rental properties will outpace the supply.
However, rent hikes will ease in 2025 to a 2% increase and will not be more than the growth in the income of the average renter. According to Greycoat, this is good news because rent currently accounts for about 35% of most renters’ income. More than 33% in 2021-2022.
Rent And Renter’s Income
In London, rents account for 42.5% of renters’ income. Even though rents will continue to rise, it will be at a slower rate. This includes of course, the rise of mortgage rates as well. Greycoat agents state that renters in the capital don’t have the ability to pay higher prices. As a result, there is a drop in month-on-month rental growth from 1.2% in 2022 to just over 0.5% this year.
Plus, for the next 19 months it is anticipated to remain under the average in the UK, as rental homes continue to be in short supply, Greycoat adds. The series of national lockdowns led to increased demand for rental properties beginning in mid-2021 that has continued to grow.
Lowered Profitability
Many landlords who have high-interest mortgages and face changing environmental and tax policies have found they are making less profit. We are actually experiencing a housing crisis, many of them are selling their properties. This means there are fewer rental properties, and they have higher rents; plus, high mortgage rates make it hard for people to purchase rental property, Greycoat Real Estate explained.