Lettings market revived as demand outstrips supply in Q1
THE lettings market staged a revival during the first quarter of the year as a shortage of homes pushed rents higher, research showed today.
The Royal Institution of Chartered Surveyors said 30% more of its members in Great Britain reported seeing rising rents during the three months to April, than those who saw falls.
The situation represented a sharp turnaround from the previous quarter, when an equal number of surveyors reported rising rents as those who saw falls, leading to a balance of zero.
It was also a considerable improvement on April last year, when a record 58% more surveyors said rents were falling, as the lettings market became flooded with properties that homeowners had been unable to sell.
Going forward, surveyors are optimistic that the market will continue to recover, with a balance of 36% expecting rents to continue rising, the highest level recorded since the survey was first started in 1998.
The group said rents were being driven higher by a continuing decline in the number of houses and flats available to let.
Around 12% more surveyors said they had seen a fall in instructions from landlords than those who saw a rise, as the housing market recovery tempted so-called accidental landlords to sell their properties rather than continue to rent them out.
The proportion of landlords selling properties when they came to the end of a lease rose to 5.2% during the period, the first time it has risen above the long-term average of 5% since the first quarter of 2008.
Meanwhile, demand for rental property remained strong, with 30% more surveyors reporting a rise rather than a fall, the highest level since January 2009.
Houses remained marginally more popular than flats during the first quarter, although the appeal of flats is beginning to increase.
RICS spokesman Jeremy Leaf said: "With sellers back in the housing market, supply has fallen back in the letting sector.
"This is good news for landlords as rents are set to move higher in the coming months and yield returns are likely to improve.
"Moreover, the news that buy-to-let specialists are beginning to lend again may also encourage investors to return to the market."
But he added that the new Government’s plans to increase capital gains tax may encourage some landlords to sell properties to take advantage of the current rate.
Tenant demand was strongest in London and the East during the quarter, while it rose in all other regions of Great Britain other than the South West.
London and the East also saw the strongest rent increases, with surveyors expecting rents to continue rising in all regions.
The number of new instructions fell across the whole country, with the Midlands and Wales seeing the steepest drop.