This is what will happen to rents next year
It has been an eventful year for landlords.
They have been under intense pressure from the government in 2016, starting in April, when former chancellor George Osborne's stamp duty hike on second homes came into effect. Then, when Philip Hammond took over, he used his first Autumn Statement to ban letting agents' fees for tenants, saying that landlords should foot the bill.
Read more: Opinion: Forget fee bans – it's time to regulate letting agents
And next year doesn't look like it will be much easier. In April, changes to mortgage interest relief for landlords will be phased in. By 2021, landlords will not be able to deduct mortgage interest payments or other business costs from their taxable income. It is thought this will force over 400,000 landlords up a tax bracket.
So, how will this affect rents? Only time will tell whether landlords pass on the extra costs to tenants. Eighty per cent of letting agents think rents will rise as a result to the ban on letting agents' fees. But, research from Shelter suggests this won't happen. The housing charity found that only two per cent of landlords increased rents when a similar change was brought in in Scotland.
The other factor is how the tax changes impact on supply. Landbay's chief executive John Goodall said:
By dampening buy to let purchase activity more than intended, the government’s actions look set to constrain supply of rental housing while demand continues to grow strongly. Tenants will unfortunately have no choice but to compete for the limited stock.
The Royal Institution of Chartered Surveyors has said there will be a 1.8m shortfall in rental properties due to the stamp duty increases on second homes. Goodall has predicted that, as a result, average rents in the UK will rise by three per cent over 2017, slightly ahead of inflation, which is forecast to rise by 2.7 per cent.
Read more: Hammond to scrap letting agent fees in today's Autumn Statement
The Brexit vote, and how the eventual negotiations pan out, will also loom over the rental market. Estate agents Jackson-Stops & Staff have predicted rents in London to rise by a "marginal" three per cent as tenants working in financial services face uncertainty.
Nick Leeming, chairman of Jackson-Stops & Staff, said: "The longer term five year outlook for rents in London is stronger than the sales market, as some people who would otherwise have bought will continue to rent due to uncertain market conditions. Some savvy investors will see 2017 as a good time to invest, with the pound’s depreciation in value making London property ripe for the picking."