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Lettings over supply pushes rents lower

Thursday, 19 March 2009 10:19 AM

Rents have dropped across the residential lettings sector, according to the Royal Institute of Chartered Surveyors (Rics) lettings survey, published today.

Between the third and fourth quarters of 2008, the net balance of chartered surveyors reporting rises in rents fell from 12 per cent to 48 per cent, the lowest level in the survey's history.

Although rental prices are not falling as fast as house prices, the survey suggests it is over-supply which is the predominant cause of the rental price fall.

However, the survey also found how low levels of housing transactions may be the cause of increased demand in the rental market, with 42 per cent more chartered surveyors reporting a rise than a fall in rental demand, compared to 29 per cent in the previous quarter.

Rics spokesperson, Jeremy Leaf, said: "The market place has become more and more competitive as reluctant landlords continue to look to let properties they are unable to sell.

"With property sales at historical lows, the rental market will continue to boom - provided unemployment levels do not increase significantly. The downward pressure on rents will increase in the coming months where supply matches demand but with house prices still falling, yields will continue to increase for many investors."

The most marked change according to the survey was in London and the south, where the rise in rents for London houses fell from - 53 per cent to - 71 per cent. However the biggest turnaround was in the south-west where the net balance of surveyors reporting rises in rents for houses plummeted from 0 per cent to -73 per cent.

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