14 December 2012 Last updated at 06:35 ET
Surveyors are predicting that the cost of renting a home will rise by 4% in 2013, double the predicted rate of UK house price growth.
The Royal Institution of Chartered Surveyors (Rics) said that a slight improvement in the UK economy would be reflected in the property price change.
But many potential first-time buyers would be squeezed and see rents rise.
Lenders have predicted that prices will stay relatively stagnant next year and sales remain well below their peak.
‘Tentative signs of recovery’
Simon Rubinsohn, chief economist at Rics, said that mortgage lenders would continue to demand high deposits, and first-time buyers would continue to struggle to secure a mortgage.
This would add to demand for rental properties, and so raise rental costs.
He said that the group expected property sales in general to hit their highest level since 2007, although this would still be 40% lower than at the start of the credit crunch.
This increase would be assisted by the Funding for Lending scheme, which sees cheap funds supplied to banks by the Bank of England for them to pass on to small businesses and household borrowers.
He suggested the rise in activity would be seen in some of London, as well as the south-east of England and the north-east of England.
“These tentative signs of recovery in the sales market should not blind us to the very real problems that still exist,” he said.
“Even with the Funding for Lending scheme and some other government policies beginning to be felt in the mortgage market, many first-time buyers will continue to find it difficult to secure a sufficiently large loan to take an initial step on the housing market.
“Meanwhile, the alternative of renting is becoming more and more costly with a further increase in rents likely in 2013.”
He called for the government to put the conditions in place for house building to increase.
BBC News – Business
Rent ‘to rise faster than prices’
This article
Rent ‘to rise faster than prices’
can be opened in url
http://businessnewster.blogspot.com/2012/12/rent-to-rise-faster-than-prices.html
Rent ‘to rise faster than prices’
