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Policy changes are cited as the main reason why landlords could pull out. Their predictions for the next three years were just as negative, with 52 per cent of those surveyed saying there would be a net reduction in landlords in the next three years. Only 17 per cent thought there would be an increase

The RICS members estimated that rental growth will outpace house prices because demand for rental properties will continue to be higher than the supply. They forecast that rental rises will go up by an average of three per cent per year for the next five years while house prices will go up by two per cent. The biggest problems facing landlords at the moment are policy changes which are effectively squeezing landlords’ abilities to make a profit. Changes in stamp duty, tax relief on mortgages, and the abolition of letting agents’ fees will have an adverse effect on landlords. Many feel they have no option but to increase rents to offset these extra costs to them.

Paul Bagust of RICS said the findings of the survey were concerning. He said it was essential for a healthy housing market to have a private rental sector which functions properly. He also pointed out that more than 20 per cent of households will be in the private rented sector by 2020. RICS’ chief economist Simon Rubinsohn also pointed out that although the Build to Rent scheme is gathering pace, it is doubtful if it will be quick enough to address the shortfall in rental properties. This is of particular concern because fewer people can afford to buy and are expected to live in rental properties for longer – if not forever – as they feel they will never get a foot on to the property ladder.

RICS is part of a team developing a revised industry-led PRS Code of Practice to raise standards for tenants and landlords. It is hoped this will encourage landlords back into the market if it is managed more professionally. Hopefully, this could be one way to improve standards and encourage investment.