Privately rented accommodation costs could rise 15.5% in next five years

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Estate agents Savills has predicted that by 2022, the average rent charged by private landlords could be 15.5% higher.

According to a November 2017 article, Savills expect rents to rise by 2.5% in 2018 and 2019, 3% in 2020, and by 3.5% in 2021 and 2022. It forecasts that London will see the highest rent rise of around 17% by 2022.

One of the main reasons for rent rises is to cover the extra interest costs landlords are likely to pay on commercial mortgages for buy-to-let properties. The Bank of England has increased the based interest rate from 0.25% to 0.5% this month, and some financial experts believe that this increase will be the first of a number of small rate increases over the next few years, which will be passed on to mortgage borrowers.

Landlords who have fixed rate mortgages will continue to pay the same amount of interest, but should expect increases at the end of the fixed rate period.

There have also been increases in stamp duty, decreases in tax relief and new affordability rules for portfolio landlords applying for new commercial mortgages. These cost increases are usually passed on to tenants in the form of rent increases. More difficult conditions could cause some small landlords to sell their properties.

There is an undersupply of rented accommodation, so even with rent hikes, landlords may still have little difficulty finding tenants and making a profit, especially in high-demand locations.

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