Rents increasing as supply falls
A shortage of properties available to let continued to push rents higher during the second quarter of the year, research indicated.
The ongoing problems in the mortgage market, combined with concerns that house prices are falling again, have led to increased numbers of people looking to rent a home, the Royal Institution of Chartered Surveyors (RICS) said.
But despite interest rates being at a record low, making investing in property attractive, landlords are continuing to face problems getting a buy-to-let mortgage.
The group said this had led to the number of homes available to rent remaining low, with supply falling for the fourth consecutive quarter during the three months to the end of June.
Overall, 6% more surveyors said they had seen a fall in new instructions compared with those who had seen a rise, although this was down from 12% in the previous quarter. But at the same time, a balance of 26% of surveyors reported a rise in demand from potential tenants – the second consecutive quarter during which demand has increased at a pace above the long-term average.
The group said tenant demand increased across all regions of the UK, but was strongest in London and the East.
Unsurprisingly, the combination of falling supply and rising demand led to rents rising for the second quarter in a row, with 27% more surveyors saying the cost of renting a home had increased during the second quarter, compared with those who reported a fall. Going forward, a balance of 33% of surveyors expected rents to continue rising, with rents for houses marginally outperforming those for flats.
The group said the market was now very different to a year ago, when rents were pushed down by a flood of properties being made available to let after their owners were unable to sell them.
RICS spokesman James Scott-Lee said: “Supply of lettings property continued to fall in the three months to July although at the slowest pace in a year which, amid rising tenant demand, has helped propel rents higher for the second consecutive quarter. Existing landlords keen to expand their portfolio may still be struggling to access the necessary finance despite improved market conditions.”
Rents increased in all regions of UK, apart from the North, during the second quarter, while only the South West and East saw a rise in the number of properties available to let.
Copyright © 2010 The Press Association. All rights reserved.
Category: Property News
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