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Landlords finding favour in rental market

Landlords finding favour in rental market

Category: Buy To Let

Updated: 07/12/2011
First Published: 07/12/2011

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Landlords are continuing to reap the rewards of a booming rental market, as demand and prices continue to ascend.

Figures from the Royal Institute of Chartered Surveyors (RICS) show that rental prices and rental yields increased in the three months to the end of November.

A lack of mortgage finance, trouble with raising deposits and an uncertain jobs market are all pushing people to the rental market.

Fears over the economy mean that people are seeing renting as a safer option than buying a home at present.

Nineteen per cent more surveyors reported a rise in the price of renting rather than a fall during the three months, although the pace of growth has eased somewhat compared with earlier in the year.

Rental yields also increased during the period for the seventh consecutive quarter. RICS said the trend 'reflects the imbalance between rental demand and supply which is continuing to push rents higher'.

During the period, surveyors said that some properties, particularly family homes, are now coming to the lettings market after unsuccessful sales campaigns.

The success landlords are having means fewer are contemplating getting rid of their properties once their existing tenancy agreements come to an end.

Just 2.6% said they were considering putting their properties on the market, further constraining supply in the mortgage market.

From a regional perspective, rents in London picked up at the fastest pace, while they rose more modestly across the North, the South East, the Midlands, Scotland and Wales . Meanwhile, positive tenant demand across all UK regions is supporting the overall rental outlook.

Expectations remain upbeat, with 25% more surveyors expecting rents to rise rather than fall.

"The disappointing economic message communicated by the Chancellor in his Autumn Statement and the prospect of further job losses in some sectors and areas over those previously envisaged is likely to continue to underpin the residential lettings market in the near term," said RICS spokesperson James Scott-Lee.

"Indeed, despite a measure of resistance to rising rent levels from tenants, in some parts of the country the imbalance between demand and supply for rented property suggests that for the foreseeable future landlords will have a good if not increasing return on their investments in comparison with other main stream options."

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