Demand for rental property continues to outpace supply

New tenant demand again outpaced supply of rental property in the three months to July, as many continued to turn to the lettings sector, says the latest RICS Residential Lettings

Related topics:  Specialist Lending
Millie Dyson
31st August 2011
Specialist Lending cash coins increase grow money growth
As a result of this, rents continued to increase although the survey indicates that the pace of growth moderated slightly, with 34 per cent more surveyors reporting a rise in rents rather than a fall (compared with 42 per cent in the previous three month period).

Significantly, the imbalance between demand and supply is thought likely to persist with the survey results suggesting that further gains in rents are likely over the coming months.

One of the main drivers of the strong demand for rental property continues to be would-be buyers who have moved to the lettings market after struggling to find mortgage finance, or first-time buyers unable to meet lenders' deposit requirements.

As a result, 25 per cent more chartered surveyors reported a rise in demand than a fall.

However, it is significant that the challenging economic environment is also leading to more tenants relying on assistance from the government. Social lettings are now at their highest level since the series began in 1999, at 13 per cent of all new lets (up from eight per cent).

Meanwhile, lettings to private renters continue to make up the majority of lettings, at 66 per cent.

 New landlord instructions - which indicate the flow of rental property coming to the market - continue to edge upwards albeit only modestly, with just five per cent more respondents reporting a rise in new instructions than a fall.

Surveyors report that where tenancies are coming up for renewal, some landlords - particularly those in London and the South East - are now choosing to put their properties on the sales market, leaving fewer rental properties available.

RICS spokesperson James Scott-Lee commented:

"The combination of strong tenant demand and a limited stock of good quality properties on offer is pushing rents ever higher across much of the country.

"This is the case both for houses and flats. Moreover, with mortgage finance for first time buyers likely to remain in short supply for some time to come, this imbalance is set to persist. The inevitable outcome is that rents will continue to increase."

Matt Hutchinson, director of the flat and house share website, Spareroom.co.uk, said:
 
"Our research shows that on average there are more than seven people searching for every room that comes onto the rental market, and in desirable areas where rooms in flat and house shares are snapped up almost as soon as they appear online, landlords can charge a premium.
 
"Our advice for people looking for rooms in flat and house shares is to move fast, and choose your location carefully. If you can compromise by living a bit further out of town, taking a smaller room in a house share, or sharing a room with your partner, your rent will be cheaper.
 
"The rental boom and subsequent rising rents are the knock-on effect of a stagnant property market, caused by the banks' unwillingness to lend to potential buyers, coupled with the soaring cost of living, which means people now have less cash to put towards a deposit.
 
"It's highly likely that Brits will rent for longer, and a recent census of 10,000 SpareRoom users supports that view. One in eight people living in shared accommodation is over the age of 40, suggesting that mature adults are increasingly forced by financial circumstances to flat share.
 
"The census also revealed that 54% of those in shared accommodation still dream of one day owning their own homes, but believed it would be at least five years before they could afford to climb onto the property ladder. And one in ten said they could never see themselves ever being able to buy a property."
More like this
Latest from Property Reporter
Latest from Protection Reporter
CLOSE
Subscribe
to our newsletter

Join a community of over 30,000 intermediaries and keep up-to-date with industry news and upcoming events via our newsletter.