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Hertford letting agent and Chartered Surveyors Knight Property Management has said that the latest RICS Residential Lettings Survey reports strong tenant demand and falling supply pushing prices higher.
Rents rose at a rapid pace in the three months to the end of January, as
falling supply of rental properties and strong tenant demand continued to drive
prices upwards.
40 per cent more chartered surveyors reported rents rose rather than fell in
the three months to January - which is the highest positive reading in the
survey’s history. As rents increased, gross rental yields have also risen
sharply – they have now increased in each of the last four surveys.
Continued difficulty in securing mortgage finance and large deposits required
by lenders remain a barrier to home ownership. As result, many have turned to
the rental market and tenant demand has grown rapidly since late 2009. In the
latest survey, 32 per cent more surveyors reported seeing a rise rather than
fall in demand, with houses more in demand than flats.
Perhaps unsurprisingly, as the recession bites more people are requiring
social housing. The survey reveals that the proportion of social tenants has
broadly doubled from six per cent before 2009 to 11 per cent now. Meanwhile, the
proportion of student lettings fell, moving from nine per cent in the previous
survey, to five per cent in the three months to January.
Supply of rental property to the market continued to decrease, with four per
cent more surveyors reporting decreases, not increases, in the three months to
January. Interestingly, the percentage of stock from private landlords has
fallen from over 80 per cent before 2009 to around 70 per cent. This is
indicative of the reduced role of the buy-to-let investor in the market over the
past couple of years.
Looking ahead, surveyors remain positive that the market will remain buoyant,
with 37 per cent more predicting rents will rise rather than fall over the three
months to April 2011. All areas of the UK expect rents to increase, with
relatively modest rises in the South West but much more notable increases in
London.
RICS spokesman Jeremy Leaf said, "The current buoyant state of the rental market is likely to persist for some
time to come, given the challenges facing the sales market. It is unlikely that
finance for first-time buyers will become much more readily available, while
uncertainty over the economy may also deter potential homebuyers.
"As a result, demand for property to rent will remain strong and in all
probability will continue to outstrip supply. In this environment, rents will
remain on an upward trajectory adding to the pressure on many households whose
incomes are already being squeezed by rising inflation prices and the hike in
VAT.”
For more information: RICS Residential Lettings Survey
The RICS Residential Lettings Survey began in 1998. This quarterly survey
provides a comprehensive picture of the lettings market across England, Wales
and Scotland as well as a regional breakdown.
The survey includes trends in tenant demand, gross yields, and rent
expectations broken down by region and property type.
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