10:00 AM, 9th March 2023, About 12 months ago 4
Despite rising rents and continued demand from tenants, there will be more landlords leaving the private rented sector, a new survey reveals.
The latest RICS survey found that tenant demand has increased by 32% from January.
However, the organisation points out that while tenant demand is high, more landlords are selling up over fears of regulation changes that will restrict a landlord’s options.
Rents are also continuing to rise and the organisation predicts the average annual growth rate will be more than 25% in the next five years.
Landlord instructions are also in decline, although at a lesser pace than in the recent months at -13%.
Sam Rees, senior public affairs officer at RICS, said: “With rising rents and diminishing housing stock in the private rental sector, the government must do more to support landlords who are leaving the market due to increasing cost and regulation challenges.
“Landlords continue to raise concerns with RICS on the lack of clarity and financial support from government to meet expensive energy efficiency improvement targets which is further pressuring landlords into exiting the sector.”
He added: “RICS would also encourage the government to restore the Local Housing Allowance to the 30th percentile to support those private renters who are struggling with rising rents.”
Sarah Coles, the head of personal finance at Hargreaves Lansdown, said: “While the number of landlords leaving the market has slowed, they’re still packing up and heading out – while tenant numbers continue to grow.
“It means more rent rises are on the horizon – which isn’t just miserable for renters, it also bodes ill for the stickiness of inflation.”
She added: “Buyer and seller numbers continued to drop, agreed sales fell, and prices were on their way down.
“In order to shift properties, most people are now having to accept an offer. Despite pockets of enthusiasm, these aren’t signs of a rising market.
“When you add in the Bank of England’s figures showing rock bottom levels of mortgage approvals in January, it means we may well see more decline in the months to come.”
RICS also says house buyer demand fell again for the tenth consecutive month to -29%.
The number of agreed sales was down from January, but they are falling less slowly than in previous months.
The organisation revealed 60% of homes worth up to £500,000 are selling for less than the asking price – and for homes worth between £500,000 and £1 million that figure rises to 70%.
The new sales indicator was also less negative in February, improving from a net balance of -36% to -26%. However, the average time taken to complete sales continues to rise and is now approaching 19 weeks.
According to the survey, house prices fell and agents expect them to fall over the next 12 months.
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