Tenant demand is flat as fewer landlords offer homes – RICS

Both the PRS and residential property sectors are showing tentative signs of recovery, the Royal Institution of Chartered Surveyors (RICS) says.

Its UK Residential Market Survey for June found that while the lettings market grapples with persistent challenges, the sales market is showing early indications of stabilisation.

Respondents say that tenant interest has remained largely unchanged, recording a net balance of -2% in June.

Meanwhile, the number of landlords offering properties for rent continues to dwindle, with a net balance of -21%.

Despite this contraction, optimism persists among surveyors, with 24% anticipating further rent increases over the next three months.

However, that’s a lower prediction compared to last month’s 43% figure.

Market is entering a settled phase

The organisation’s head of market research and analysis, Tarrant Parsons, said: “The UK residential market appears to be entering a more settled phase, with demand showing signs of stabilising following a period of volatility.

“The earlier distortion caused by transactions being brought forward ahead of the Stamp Duty changes now appears to have largely dissipated, allowing underlying trends to re-emerge.”

He added: “Encouragingly, near-term sales expectations have begun to edge higher, pointing to a modest shift in sentiment.

“That said, confidence in the market remains somewhat delicate, with economic uncertainty at both the domestic and global level still seen as a potential headwind.”

Buyer interest is growing

The sales market, however, offers a glimmer of hope with buyer interest growing for the first time since December 2024.

New enquiries achieved a net balance of +3%, which is a big improvement from May’s -22%.

Agreed sales also reflect this cautious optimism, with the net balance improving to -3% – in stark contrast to the -25% and -28% seen in previous months.

While this suggests a steadying market, robust recovery remains elusive, RICS says.

Property listings fall

Looking ahead, surveyors are cautiously optimistic about near-term sales volumes, with a net balance of +6%, up from -2% in May.

However, expectations for the next 12 months remain subdued, with a net balance of +5% indicating a largely flat outlook.

New property listings have declined slightly, with a net balance of +3% in June compared to +7% in May.

Though 16% of respondents noted a rise in market appraisals compared to last year, suggesting a steady supply of properties.

House prices are flat

House prices across the UK remain broadly flat, with a net balance of -7%.

Regional disparities are evident, with the South East, East Anglia and London experiencing sharper price declines.

Northern Ireland, the North West, Scotland and the East Midlands report notable growth.

Looking forward, 24% of surveyors expect prices to rise over the next year, despite a slightly negative short-term outlook.

Reaction from the property sector

Jeremy Leaf, a north London estate agent and a former RICS residential chairman, said: “Nervousness about the cost of living again and seemingly inevitable Autumn tax rises are contributing to present tenant affordability concerns.

“On the ground, we are finding there’s still interest, particularly in smaller one- and two-bedroom flats.

“Rents are being supported by a continuing lack of stock due to landlords selling up and not being replaced in anything like sufficient numbers by new or existing investors.”

Tom Bill, the head of UK residential research at Knight Frank, said: “Rents are heading higher again as supply is squeezed, which won’t be welcome news for tenants.

“The impending Renters’ Rights Bill is one reason more landlords are selling up, which means a piece of legislation designed to protect tenants may ultimately increase their rent.”