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Two-year high in landlords selling up

Wednesday, 30 May 2007 12:00 AM

There is a two-year high in landlords selling up their buy-to-let properties, research out today reveals.

The Royal Institution of Chartered Surveyors (Rics) finds 5.2 per cent of landlords sold a property at the end of its tenant lease in the three months to April 2007. This is up over one per cent on the 4.1 per cent for the previous quarter to January 2007.

Rics explained many landlords were selling due to falling gross yields and rising borrowing costs.

"May's interest rate rise combined with the prospect of another rate rise in the coming months may yet lead to further landlord sales as they come under greater financial strain," Rics noted.

The quarterly report into lettings also shows the biggest fall in tenant demand since the first quarter of 2005.

The organisation finds 16 per cent more surveyors reported a rise than a fall in tenant lettings over the three months to April. This is below the long-run average of 18 per cent, and almost half the 28 per cent figure for the quarter up to January.

"House buyers are returning to the market to avoid rising borrowing costs, signalling a drop in demand for rental property. With more supply on the market due to a rush to avoid the upfront costs of Hips [home information packs], which now seems a little premature, buyers have found the market less tight than expected.

"Rising borrowing costs and a subsequent drop in yields have also contributed to a worrying time for landlords. Interest rate rises later in the year will have a further dampening effect, but the underlying strength of the economy and an active housing market should ensure a soft landing for many."

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