Residential Property Rents Rose Again in April

Increased tenant demand and low levels of rental property coming onto the market pushed rents higher in the three months to April, says the April 2011 RICS UK Residential Lettings Survey.

Overall, 42 per cent more surveyors reported rents rose rather than fell in the three months to April (up from 40 per cent more). 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 per cent more respondents reported demand rose rather than fell – the highest level for over two years.

Turning to supply of rental property to the market, 6 per cent 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 per cent (from -7 per cent). The increase for houses was slightly less than in the previous three month period (+2 compared with +5 per cent).

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 per cent of landlords sold property in the three months to April (down from 4 per cent).

Looking ahead, the overall rental outlook remains strong, with 33 per cent 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.