Rents for houses and flats are predicted to rise sharply over the next five years according to estate agents, reported the Financial Times in November 2016.

The reason for these rises could be due to the extra costs that landlords face after government changes to buy-to-let tax rules. Stamp duty on buy-to-let property has increased, and the tax relief on mortgage payments is to be reduced.

Estate agent Savills forecasts rents to rise by 25% in London and 19% outside the capital. The forecast of estate agents JLL is lower, at a 19.9% rise in London and 17.6% in the rest of the country.

Rental growth is predicted to be greater than the rate of house price rises, which Savills predicts will be flat in the near future. Lucian Cook from Savills said that rent rises are in response to the supply and demand mismatch.

The rising costs of buy-to-let investments have caused many landlords to be cautious of investing in London, where yields are lower than those often found in cheaper housing areas. Higher rents and low interest rates for commercial mortgages will help pay for the increased stamp duty and tax rises for landlords.

The housing and rental market in the next five years will be affected by the exit from the European Union. Neil Chegwidden of JLL said:

“The five-year outlook for the UK is almost wholly dependent on the terms of the exit from the EU, and the agreements we manage to put in place.”