More renters are flooding the UK rental market as many people are priced out of the home-buying market or face difficulty in affording rental property that has likewise risen in price. The latest Residential Lettings Survey indicated an increase in rent prices as well as those seeking rentals for the second straight quarter. Meanwhile, supply in the rental market is dwindling as more people are forced to rent because they can’t afford the purchase price of homes or the mortgage rates. For more on this continue reading the following article from PropertyWire.
Increased tenant demand and low levels of rental property coming onto the market pushed rents higher in the three months to April, according to the latest Residential Lettings Survey from the Royal Institution of Chartered Surveyors.
Overall, 42% more surveyors reported rents rose rather than fell in the three months to April, up from 40% in the previous quarter, according to the survey published today (Thursday June 09). Although rents increased across Great Britain, it was London and the South East which saw the most notable increases.
Comments from surveyors reveal that rents in some areas have now risen so sharply that previously affordable homes are now unattainable to many, as an increasing number of renters are priced out of the market.
Meanwhile, home ownership remains out of reach for many would be buyers, partly because of the high deposits required by lenders, but also due to the cost of available mortgage finance. As a result, surveyors report that many people have little choice but to rent. In the three months to April, 35% more respondents reported demand rose rather than fell, the highest level for over two years.
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Regarding supply of rental property to the market, 6% more surveyors reported new instructions from landlords increased rather than fell, taking the net balance into positive territory for the first time since April 2009. Instructions from landlords to let flats showed the most pronounced change, with a net balance of +6% from -7%. The increase for houses was slightly less than in the previous three month period, +2% compared with +5%.
Despite an upturn in new instructions, supply to the market still remains unable to keep up with demand. Tenants are staying longer, resulting in less availability, while fewer landlords are selling their properties at the end of a tenancy. Just 2.8% of landlords sold property in the three months to April, down from 4%.
Looking ahead, the overall rental outlook remains strong, with 33% more surveyors expecting rents to rise rather than fall. Expectations for rental prices were highest in London, followed by the Midlands, the South East and the North.
‘Although we are beginning to see more mortgages aimed at first time buyers, many potential homeowners are still restricted from getting a foot on the property ladder, leading to increased demand in an already oversubscribed rental market. There has been a small uplift in supply, but the imbalance between demand and availability can only mean rents will continue to rise,’ said RICS spokesperson James Scott-Lee.
The RICS Residential Lettings Survey began in 1998. This quarterly survey provides a comprehensive picture of the lettings market across England, Wales and Scotland as well as a regional breakdown.
This article was republished with permission from PropertyWire.