Rents across the UK are set to rise considerably faster than house prices over the next five years, according to property agents Savills.
Property agents, Savills have predicted that rent will rise significantly over the next five years, forecasting a rise of 19% between now and 2021. House prices will only rise 13%.
The gap between house prices and rent will be most prominent in London, where it is predicted that rents will rise by 24.5% and house prices by 10.9%.
The reason was “post-referendum economic uncertainty” and weaker consumer sentiment.
Savills predict that next year the average house prices will not increase at all, with falls of up to 2.5% in Scotland and the North East.
However prices in the north will start to “outperform” by the end of the five year period.
At the same time demand for rental properties will increase, it said, as first-time buyers struggle with affordability.
Lucian Cook, Director of residential research said: “The rental growth is largely driven by the mismatch between supply and demand.”
Savills said the number of mortgaged buy-to-let investors purchasing new homes was set to drop by a third to 80,000 by 2018, recovering slightly to 90,000 by 2021. Cash buyers, many of whom are investors, will drop by 18% by 2018.
According to the National Office for Statistics, on an annual basis, house prices were up 8% in August across the country and 12.1% in London.
JLL, another estate agency group, predicted a 17.6% increase across the UK by 2021, with London rents rising 19.9%, far outstripping predicted rates of inflation.
Neil Chegwidden, head of residential research at 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.”