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Rents are forecast to steadily rise over the next five years, according to forecasts by Knight Frank. The property consultancy predicts that rents will rise nationally by 1.2% this year, 2.5% in the next five years, and then 3% in 2021 and 2022. Altogether, this adds up to a total rise of 14.7%. For London, it is even better, with predictions that rents are expected to go up by 0.7% this year, 3% next year, 2.5% in 2019 and then 3% for the following three years. This totals 15.2%. However, the outer London rental market is not so robust, with rents expected to fall by 3.5% this year and 1% in 2018. Growth is predicted to return in 2019, but at just 1%, followed by a 2% rise in 2020, 2.5% in 2021 and 3% in 2022.

Actual property prices nationally are also expected to rise by 1.5% this year, 1% next year, 2% in 2019, 3% in 2020, 3.5% in 2021, and 4% in 2022, according to Knight Frank’s forecasts. The property price growth over this period is expected to be most robust in the Midlands, East England and the North West.

In its report, Knight Frank forecasts rising momentum across the market once the Brexit deal is finalised. It also believes that the shortage of new builds is unlikely to be fully reversed in the next few years and this will also have an effect on prices. Investing in property still seems to be a fairly healthy option for the next five years.

However, concerns have been raised about tenant affordability, with more than one in four letting agents seeing a rise in rents in the final quarter of 2017. According to the Association of Residential Letting Agents, 27% of agents saw rent increases for tenants, which has raised fears that increased inflation and slow wage rises is putting pressure on consumers’ spending power. Demand for rental accommodation is rising overall, as more people are unable to afford to get on the property ladder or are making a lifestyle choice to rent and not buy. New research from ING shows many people accept they are unlikely to buy a home. Although many would like the security of owning property, they accept that they will be unable to afford to. As demand continues to outstrip supply, rent prices could continue to rise.

ARLA Propertymark‘s chief executive, David Cox, warns rents could rise in the New Year once the market picks up, unless there is an increase in the supply of rental homes on the market. He said that many tenancies are agreed over the summer, so that both supply and demand are usually lower in the autumn. However, a large number are also agreed in the New Year, which will increase competition for properties among tenants if the stock remains low. This, in turn, is likely to push rents up. With more landlords considering selling up or not increasing their portfolio, because of tax and stamp duty changes, it seems unlikely that this upturn will arise anytime soon.

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