Quarter 3 found rents dropping as potential sellers flood the market with unsellable properties, according to RICS Letting Survey (published 18th November 2008)
There is a record high of surveyors confirming new instructions to let flats and houses - a 50% increase in flats and a 68% increase in houses were reported. Vendors have been left feeling frustrated by lack of demand for sales in the housing market, so have been placing their property in the letting market.
The influx into the market of 'To-Let' properties has forced downward pressure on rents, with the lowest level in the survey's history (from a positive 31% in Q2 to a negative -12% in Q3). London and the Southeast have been hardest hit and expectations for future rises turned pessimistic for the first time since July 2002.
Although housing transactions are at their lowest level since records began, demand for rental property has remained positive in Q3. 27% more Chartered Surveyors reported a rise, rather than a fall, in rental demand.
James Scott-Lee (RICS spokesperson) commented:"The lettings sector has witnessed a boom in 2008 as sales in the housing market continued to slow. Many have been able to take advantage of rising rents to secure good returns. However, the market place has become more and more competitive as many vendors have been forced to become amateur landlords, creating an inevitable downward pressure on rents where supply has matched demand. With national average house prices set to weaken in 2009, yields may increase for those investors who can provide the right product for the right market place."
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