As a property investor, rental growth and increasing yields are some of the main positives of the current buy-to-let market, offsetting the current cost of borrowing and other housing costs.
According to the JLL Residential Property Forecast report, rental market growth trends will continue in 2024 thanks to tenant demand and low supply, among other things.
The report shows that rental home supply has fallen short of tenant demand by roughly 1.5 million homes. Over the next five years, the shortfall should amount to 720,000 in the UK’s private rented sector.
As a result, UK rents should increase by 22.80% between 2024 and 2028. Over the next year, the market should see a rise of 5%. Over the following years, rents are forecast to rise by 4.5% (2025), 4% (2026 and 2027), and 3.5% (2028).
JLL had the following to say in the report notes:
‘Looking ahead, over the next five years, the lack of new rental stock, the result of fewer new home completions and a more challenging interest rate environment will likely lead to rental growth surpassing wage growth.
‘We forecast a 5% increase in rents across the UK in 2024. From 2025 onwards, we anticipate that more attractive mortgage rates will prompt more tenants to transition into homeownership, and this shift will bring about a better equilibrium between tenant demand and available rental stock.’
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