Against a backdrop of falling house prices, the cost of renting continued to increase in the third quarter of the year.
Falling supply of new property in the rental market coupled with increased demand led to a rise in rent in the three month period to the end of October. Figures from the Royal Institute of Chartered Surveyors (RICS) show that 39% more surveyors reported an increase rather than a fall in rents during the three months.
The balance of RICS members reporting increasing rents is currently at its highest level since the second quarter of 2007 as increasing numbers of people have turned back to the rental sector.
Many people are seeking to rent rather than buy due to difficulty in securing mortgage finance and the high deposits required by lenders. Other potential buyers appear to be waiting for house prices to fall yet further and are choosing to rent until they feel there is value in the market.
As a result, surveyors report the rental market remains buoyant, with properties being let very quickly and landlords experiencing very few voids.
Unsurprisingly, the uptake in rental properties has seen the average cost of letting a home increase. Figures from LSL Property Services found that average rents rose to £691 a month in October.
And in some parts of the country, competition is so strong that interested parties have been invited to place sealed bids – a practice more common when buying a home – to secure a much wanted property.
"The lettings sector has become increasingly strong over the past nine months, in contrast to the housing market which continues to slow," RICS spokesperson, Jeremy Leaf, said
"Many have turned to the rental market because they fear further price reductions in the housing market, or because they cannot obtain the necessary finance to buy.
"As a result, rents continue to rise with supply failing to keep up with demand.
"However, there are increasing indications that more landlords are recognising these benefits and looking to add to their portfolios - especially as there has been a rise in the number of providers willing to offer investment mortgages in recent months."
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