Surveyors predict buy-to-let rents will rise nationally in coming months, and rents will stop falling in London and the South East as tenant demand continues to strengthen.
The Royal Institute of Chartered Surveyors’ (RICS) survey of the residential lettings market shows house price uncertainty prompting homeowners to sell up and rent. Demand for rental flats and houses has remained strong throughout the Christmas/New Year period.
Jeremy Leaf, residential lettings spokesman for RICS, said: ‘We have certainly noticed a change in the lettings market over the past quarter. There has been renewed tenant interest in smaller properties in particular, as would-be buyers are renting temporarily, waiting to see if sales prices fall. Many homeowners are also selling up and renting, hoping to make a profit from buying in a declining market.’
However rents are still down for the fourth quarter in a row in most regions across the country, a net drop in rents of 9% was reported by surveyors. Falls were most noticeable in London and the South East, while the North and west Midlands saw a slight rise. Leaf said: ‘Previous over-supply of property is keeping rent levels in check and is likely to result in more balanced lettings as well as sales markets in the coming months.’
Malcolm Harrison, spokesman for the Association of Residential Letting Agents, commented: ‘The problem with any survey like this is that the picture is a patchwork, we have the same problem with our own surveys. The situation can literally be changing from street to street. As soon as house price inflation goes off the boil the rental demand increases, its one of the benefits of buy to let that you win in both cycles. But the long and short of it is that we are seeing a traditional cycle.’
He also warned against generalising about London. He said: ‘London must be split into Central London and the rest. Central London is driven by the corporate market ‘ its driver is the city, and not really the classic buy-to- let scenario.’