By Marcus Leach
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 Royal Institution of Chartered Surveyors (RICS) Residential Lettings Survey.
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.
"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," James Scott-Lee, RICS spokesperson, said.
"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.”
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