According to research commissioned by the Association of Residential Letting Agents (ARLA) and carried out by the Centre for Economics and Business Research, the cost of renting in the UK will rise by 27% over the next decade, from an average of £134 per week in 2015, to £171 per week in 2025.
With house prices rising faster than earnings, and with no growth in social housing supply, the private rented sector has more than doubled in size since 2001. This trend is set to continue, with the proportion of households in the private rented sector expected to increase from 20% in 2015 to 29% in 2025.
Home ownership, particularly among younger people, is set to decline, with house prices predicted to increase by 50% of their current value by 2025.
Commenting on the report, ARLA warns that the inevitable growth of rental costs could be made all the more painful for tenants by the increased tax burden for landlords, set to be introduced in April 2016.
In order to help minimise rental costs, ARLA recommends government debt guarantees to encourage large-scale institutional investment into the private rented sector, which would result in the creation of more available properties.
Managing Director David Cox said: â€œIf we’re to see the property market lifted out of its current state, we need to help the rental market from top down as well as bottom up, ensuring landlords are not penalised for their choice of income, and they can in turn give tenants the best possible price and service they deserve.â€