14:16 PM, 3rd December 2010, About 12 years ago
Letting agents expect buy to let rents to keep edging higher as more tenants snap up the few available rental properties.
Four out of 10 letting agents reported seeing an increase in rents over the quarter ending October 31, according to the Royal Institute of Chartered Surveyors (RICS) residential lettings survey – while some (27%) reported a fall.
Buy to let rents are now running at the highest level since March 2007.
The demand for lettings is blamed on a lack of mortgages that is forcing people who want to buy a home in to renting.
RICS letting agents report the rental market remains buoyant, with properties let quickly and landlords experiencing few voids.
Demand for rented property is strong, with houses slightly more popular than flats.
A third more surveyors (33%) reported a rise in demand than a fall, the fastest increase in demand since 2008.
New landlord instructions – a good indication of supply to the market – slipped further, marking five consecutive quarters of falling instructions.
Letting agents claim difficulty in securing buy to let mortgages is holding back many would-be landlords, and halting a fresh supply of property entering the market.
Meanwhile, renewed falls in sales saw fewer landlords selling property at the end of a tenancy – down from 4.1% in the three months to July, to 2.5% – well below the survey average of 4.4%.
London saw the biggest increase in rental prices, with a net balance of +86 – the highest number in the series history. In the North, the net balance improved from -3 to +23 but all regions are now recording increases.
RICS spokesman Jeremy Leaf said: “The lettings sector has become increasingly strong over the past nine months, in contrast to the housing market which continues to slow. Many have turned to the rental market because they fear further price reductions in the housing market, or because they cannot obtain the necessary finance to buy.
“As a result, rents continue to rise with supply failing to keep up with demand. However, there are increasing indications that more landlords are recognising these benefits and looking to add to their portfolios – especially as there has been a rise in the number of providers willing to offer investment mortgages in recent months.”
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