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House rent rising at fastest rate for three years

Friday, 3 December 2004 2:22 PM

Rents in Britain are rising at their fastest rate in three years, new figures reveal.

A survey by the Royal Institution of Chartered Surveyors (Rics) found that current uncertainty in the UK housing market is fuelling rental demand, which rose 23 per cent for flats and 22 per cent for houses in the three months to October, compared with the same period last year.

Demand over the quarter rose fastest in London, followed by the South West; the areas experiencing the greatest decline in house prices.

The capital saw its first increase in average rental yields since April 2001, with the average price for a two-bed flat in London rising to £1,517 per calendar month.

Recent surveys have indicated a substantial cooling of the British housing market, as the effects of a series of interest rate rises take hold.

Rics claims that rising demand, particularly for entry-level flats, is outpacing newly available rental properties as the buy-to-let market cools.

Jeremy Leaf of Rics said: "Sellers and agents are facing a different breed of buyer. Enthusiastic buyers keen not to miss out on getting a foot on the property ladder have gone. Now the attitude of 'why rush?' is influencing demand for rental property."

A majority of surveyors expects rents to continue to rise for the remainder of the winter and most predict slightly higher rent increases for houses than for flats.

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