Rent is rising faster than house prices

Rent is rising faster than house prices

According to RICS (Royal Institute of Chartered Surveyors), the price of renting will rise faster than house prices by 2020. They predict that rental prices will rise by 25% by the end of the decade which is faster than the forecast for house price rises. This gives property investors something to think about.

The traditional way of property investing has always been to buy properties, refurbish them to a certain standard, and then sell them on, hopefully earning decent capital gains. However, in light of these forecasts, it may be more lucrative to buy properties for the rental opportunities they represent rather than just flipping properties for a quick profit.

Check out the BBC article here about rising rents http://www.bbc.co.uk/news/business-35154420

RICS forecast that over the next few years’ house prices will grow around 4.7% year on year which will be lower than the rental growth rates. It therefore makes more financial sense to hold on to properties and refurbish them specifically for the rental market.

The property supply and demand issue in the UK is well known and there is a plentiful supply of tenants who are eager to snap up good rental properties. With this in mind, it may be more prudent for investors to purchase properties for rental rather than capital gains.