JLL 5 year forecast - rental prices

As higher mortgage rates gradually feed through, the good news for landlords is in the rental market, where the recent increases look set to continue.

There appears to be no end in sight for the lack of good quality rental stock throughout the UK.

Despite the prospect of slightly reduced house prices in 2023, many otherwise first time buyers will find themselves still locked out of the owner-occupier market. Central to a lender's affordability calculation is the monthly payment in relation to income. The higher the interest rate, the lower the loan offer. JLL expect that many prospective buyers will remain in the rental market.

UK and London rental forecast

Source: JLL Research

UK city centres rental forecast

Source: JLL Research

High rental demand is certain to continue and rising rents suggest that yields will improve, offsetting the rise in debt servicing costs for mortgaged landlords.

Birmingham, Bristol and Manchester are likely to be the strongest performing rental markets, with average rents likely to rise 20% over the next five years. Renters are showing a strong preference for recently built energy efficient apartments as they look to deal with rising living costs.