Property landlords in the UK are likely to see rental expectations increase as the supply of new properties coming onto the market falls for the second quarter in a row.
The latest residential lettings survey from the Royal Institution of Chartered Surveyors shows that the rise as new instructions fall brings an end to the downward trend in rents that has been around since the autumn of 2008.
The net balance of chartered surveyors reporting rising rather than falling rents in the three months to January 2010 was zero. This follows five quarters of negative readings and is in marked contrast to April last year when 58% more chartered surveyors were reporting falling rents, an all-time low for the survey.
In addition, expectations as to the outlook for rents continues to strengthen with a net balance of 33% of respondents believing rents will to rise over the coming quarter, up from 22%.
The more positive picture for rents can be attributed to the continued decline in supply of both flats and houses in the marketplace, the survey says. Some 23% more chartered surveyors reported a fall rather than a rise in the number of new landlord instructions for this period, up from 18% in the previous quarter.
Although the weather may have been a factor in this, it is more likely that the upturn in the housing market has tempted many of the accidental landlords away from the lettings market, the report points out.
Demand remains strong with 16% more respondents still seeing it rise than fall. Would be first time buyers, unable to get a foot on the property ladder, are still a major source of increasing demand for good rental properties. Houses remain more popular than flats and it is the supply/demand imbalance in this market that is also helping to push rents higher.
‘It is becoming clear that movements in the housing market are affecting lettings. The RICS housing survey has seen a steady increase in the number of new instructions coming on to the market over the past few months, whilst simultaneously we see with this survey that the number of properties available to rent has decreased,’ explained RICS spokesperson Jeremy Leaf.
‘This is a clear sign that the accidental landlords are returning to the sales market. If demand remains strong, which it is likely to as many first time buyers are still finding themselves priced out of the housing market, then rents should continue to rise as would be tenants compete for fewer properties,’ he added.
The quarterly RICS Residential Lettings Survey began in 1998 and 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, rent expectations and average monthly rents broken down by region and property type.
