26% more surveyors reported a rise in demand for property than a fall; this was marginally down from the last period when 30% reported a rise. Demand for houses increased at a slightly faster pace than last quarter, while demand for flats increased but at a slower pace.
Surveyors report that new landlord instructions declined for the fourth consecutive quarter, but it is evident the pace of decline is moderating. The net balance, while remaining negative, edged upwards from -12 in the three months to April to -6 in the run up to July.
New instructions for houses are declining at the slowest pace in 12 months as the net balance approaches zero.
Instructions for flats declined at a slower pace also; 9% more surveyors report a fall in instructions than a rise. This is a mild improvement on the last quarter’s result of -12. On the rental side past rents increased for the second consecutive quarter, but just off the pace seen in the previous three month period; the net balance moderated slightly from +30 to +27.
The improvement in sentiment appears to be mainly driven by the rents for houses, where the net balance increased to +37. Past rents for flats also increased but the net balance moderated very slightly from +25 to +23.
Moreover, the outlook for rents appears positive, as 33% more surveyors expect rents to increase in the next quarter than fall. Respondents view outlook for houses more favourably than that for flats as the net balances improved to +34 and +31 respectively.
Meanwhile, landlords appear in no rush to sell properties at the end of a tenant agreement; the proportion intending to do so fell back from last quarter to 4.1%. It is notable that it has now fallen back below the survey average of 4.5%.
Turning to the regional picture, tenant demand increased across all regions, but moderated the Midlands and Wales where the net balance moved from +25 to +2. It was once again strongest in London and the East. New instructions were down in the majority of markets, with the exception being the South West and the East; indeed instructions picked up modestly in the East for the first time since the second quarter of 2009.
Rents increased in all regions outside the North, where the net balance fell back into negative territory after improving markedly last quarter. Yields improved all across the country, but once again the North was the exception where they remained largely unchanged.
Tenant demand
Tenant demand increased at a moderately slower pace in the three months to July. 26% of surveyors report ed a rise in demand than a fall, compared to 30% last quarter.
- Flats and houses
Tenant demand over the period, once again increased for both houses and flats, but at a greater rate for houses. Demand for houses edged up, with the net balance improving to +34 from +31 last quarter. For flats, 22% more surveyors reported a rise in new tenant lettings than a fall. The pace has moderated a little from last quarter when 26% reported rising demand.
- By type of tenant
The percentage of new lettings to private individuals rose marginally to 73%, while the share of lettings to companies fell back again to 7%. The proportion of lettings to students increased from 6% to 7%, and the share to social tenants picked up to 11%. The proportion of new lettings to ‘other’ tenants fell to 3% from 4%.
New instructions
New landlord instructions declined for the fourth consecutive quarter, but the pace of decline has moderated further. 6% more surveyors reported a decline in new instructions than a rise, compared to 11% in the previous quarter.
- Flats and houses
Surveyors reported that new landlord instructions continued to fall at a greater pace for flats than for houses. Only 2% more surveyors reported a fall in new instructions than a rise for houses. The net balance is still in negative territory, but only marginally. New instructions for flats declined at a slower pace as the net balance moderated from –12 to –9.
- Landlord activity
The lion’s share of new instructions were by private individuals, where the net balance dropped to 70%. The percentage of instructions by property companies was down from 13% to 11%. The proportion of instructions by financial institutions improved to 13% whilst the share of instructions by ‘other’ landlords increased marginally from 5% to 6%.
