For the first time since the Great Depression in the 1930s, property rentals have surpassed real estate property sales in the UK. The driving factor behind this shift is the low supply and surging Real Estate Prices, which have led to a proportionately higher number of new rental agreements compared to property purchases.
From the year 2000 to 2014, the estimated figure of UK households renting property rose from 2.2 million in the year 2000 to 5.4 million in 2014
Timeline of Surprises in Real Estate in the United Kingdom
First Quarter of 2016: The government of the United Kingdom declared that any person purchasing a house that is not his main residence must pay a 3% stamp duty surcharge from April 2013 onwards.
March 2016: Consequent to the declaration of a hike in stamp duty, there was a surge in property transactions.
Landlords commented that this surge in stamp duty would wound/cause pain to tenants as landlords would pass the burden of hiked stamp duty to tenants resulting in charging of high rent.
Interesting to know-Many youngsters started caring their parents by being living with lovely mom and dad in consequence to the more proportionate surge in rent than proportionate increase in their wages.
April 2016: With the application of 3% stamp duty surcharge, property transactions collapsed to a great extent.
November 2016: Reverse trend was observed in latest Survey of Real Estate conducted in December. There is an affordable price hike in Houses strengthening the weak negotiating power of buyers. The average price of property went up by 0.1 percent to nearly £2, 00,000.
As per predictions of the recent survey, Rents across the UK cities will rise proportionately more than house prices in the forthcoming five years. Rent would likely to surge by 18% from 2017 to 2021. In contrast, house price will increase by 12 % proportionately. The reason attributed to this phenomenon is more economic uncertainty with the post-referendum conducted in the UK and shaking consumer sentiment.
Rents in contrast to House prices
(Recent Survey)
Year Rents House Prices
2017 2.5% 0%
2018 3.5% +2%
2019 4.5% +5%
2020 3.5% +3%
2021 3% +2%
Overall 17% Overall +12%
As per another survey, with an addition of at least 1.5 million, more households will be willing to rent rather than buy a home by 2024.
This is the time that the Government should put forward tax exemption to boost investment in real estate.
Repercussions of increasing Stamp duty change
The rental market in real estate of UK is mushrooming at the cost of the sales market. Consequently, house- buyers are struggling continuously to discover properties that they can afford.
Another Reverse trend observed at the end of the year
Focusing on the month of November 2016, Moderate rise in prices of property strengthened the weak negotiating power of buyers. Real estate prices moved up slowly. The mean price of property rose by 0.1% to the figure of nearly £ 205,000- Improving from zero growth in the last survey conducted in October 2016. Switching to an annual basis, the growth rate year-on-year was nearly 4.3%. It was 4.5 percent in the previous October.