March 18, 2011
As the residential property market continues to stumble under the weight of economic uncertainty, rental prices are rising rapidly in the face of strong tenant demand and a shortage of available properties, research has indicated.
Since the start of the year, 40% more surveyors within the Royal Institution of Chartered Surveyors (RICS) have reported an increase in rents, the highest level recorded since 1998.
Ongoing problems within the mortgage market and the high property deposits being demanded by lenders are preventing many people from becoming homeowners, claims RICS, leading to rapid growth in tenant demand.
However, at the same time, the supply of rental property continues to decrease and RICS members said there has been a shift in those renting properties.
Stock from private landlords has fallen from 80% of the market before 2009, to around 70% now. Meanwhile, the economic downturn has led to the proportion of social tenants nearly doubling, rising from 6% two years ago to 11% now.
"The current buoyant state of the rental market is likely to persist for some time to come, given the challenges facing the sales market,” said Jeremy Leaf, a spokesman for RICS. “It is unlikely that finance for first-time buyers will become much more readily available, while uncertainty over the economy may also deter potential homebuyers."
Looking ahead, surveyors remain optimistic that the market will continue to be buoyant, with a balance of 37% predicting further rent rises during the coming three months. But an influx of properties is needed to keep the market stable.
If you’re looking to rent your property to prospective tenants, seek advice before doing so and make sure your property meets all current regulations before entering the market.
