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Sharp rise in tenant demand

Wednesday, 23 July 2008 12:00 AM

Your Move has recorded a sharp increase in demand for rented accommodation in the UK property market.

The estate agent records a 38 per cent increase in lease commencements over the year to June - as would be homeowners shun the property market as prices fall.

There was also a three per cent increase between May and June this year.

According to Your Move landlords have seen the strongest demand for tenants for "decades", following a fall in property purchases since the start of the credit crunch in late 2007.

Indeed figures released today by the British Bankers' Association (BBA) find mortgage approval levels have now fallen to the lowest level ever recorded for June.

It is young buyers who have been driven out of the market and into renting by the disappearance of 100 per cent and 95 per cent mortgages, according to Your Move.

Lenders have significantly lowered the maximum loan-to-value (LTV) ratios on their products in recent months, as they attempt to weed out subprime buyers.

"The credit crunch has buried any chances most first time buyers might have had of getting on the property ladder," said managing director of Your Move estate agents, David Newnes.

"Mortgage finance hasn't been this hard to come by for fifteen years - but for landlords this is a cloud with a gold-plated lining."

June's increase in tenant demand is also part of a wider trend.

In May 2008 the number of leases commencing was 41 per cent higher than the year before, whereas the number of leases commencing in 2008 in total is up 34 per cent on the same period in 2007.

"There has been a stellar rise in the number of people looking to rent since the credit crunch began to kick in," added Mr Newnes.

"The criteria banks and building societies use for deciding how much you can borrow have got a lot tougher. People who would have fallen into the first time buyer bracket a year ago are now renting."

Chris O'Toole

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