Rents tipped to rise as tenant demand grows – RICS

Landlords face rising tenant demand, with surveyors expecting rents to increase over the next three months.

The Royal Institution of Chartered Surveyors (RICS) September survey found a net balance of +23% of respondents reporting increased tenant demand.

The measure accelerated for the third consecutive month, while the balance of landlord instructions remained firmly negative.

A net balance of +37% of contributors expected rents to rise in the coming quarter.

The balance expecting rent increases was down from +44% in August, although it remained above the first-half average of +27%.

House prices under pressure

In the sales market, new buyer enquiries fell to a net balance of -22% from -18%, the first deterioration in the measure since March.

Agreed sales also dipped, with the balance slipping to -18% from -16%.

However, new sales instructions reached +6%, their first positive reading since mid-2025, despite market appraisal activity remaining below levels seen a year earlier.

The headline house price balance fell to -32% from -28% in August, ending four consecutive months of less negative readings.

Sales market faces headwinds

Most parts of England recorded more negative house price balances, with London being notably weaker than the national figure.

Prices continued to rise in Northern Ireland, while Scotland recorded modest growth.

Looking ahead, the three-month price expectations balance stood at -24%, but the 12-month reading was zero, indicating that respondents expected prices to be broadly flat over that longer period.

The organisation’s head of market research, Tarrant Parsons, said: “A renewed rise in interest rate expectations has created a fresh headwind for the housing market, with buyers becoming a little more cautious and sales activity losing some momentum this month.

“Even so, the latest results do not point to any significant shift in direction.

“Rather, they suggest the market may need to contend with a somewhat longer period of subdued activity as households adjust to the prospect of borrowing costs remaining higher than previously anticipated.”

Higher mortgage costs

Commenting on the RICS data, Tom Bill, the head of residential research at Knight Frank, said: “There is pain in the post for the UK housing market as the impact of higher mortgage costs filters through the system.

“Mortgage offers can last for six months, which means deals that pre-date the Middle East conflict have now disappeared.”

He added: “Higher borrowing costs will increase downward pressure on prices and transaction volumes in the final months of the year.

“The situation could be exacerbated as buyers and sellers speculate about which of the recurring tax rumours ahead of the Budget proves to be true.”