Rental market still strong, says RICS
DEMAND for rental properties continued to grow as landlords saw their yields increase, according to the latest RICS Lettings Survey.
However, access to the buy-to-let market became harder for would-be-landlords as mortgage products became scarce, the survey claims.
Sixteen per cent more chartered surveyors reported a rise rather than a fall in tenant lettings, down from 20% in the last quarter. Significantly, demand for family homes still remains stronger than for flats due to an oversupply of new build.
Almost a quarter (23%) of chartered surveyors reported a rise rather than a fall in demand for houses, compared to 12% who reported a rise in demand for flats, down from 15% last quarter.
Nationally, new landlord instructions (an indicator of supply) declined for the first time in the survey's history, although they continued to rise in the north, which includes the Yorkshire and Humber region, although at the slowest pace since the beginning of last year.
The credit crunch has restricted the number of buy-to-let mortgages approved as well as the number of mortgages available to investors.
Rising yields may have stopped the recent retreat of landlords from the market. The percentage of landlords selling their properties when tenant leases expired fell from 6.5% to 4.6%.
Rental expectations also picked up sharply and are more than double the survey's long run average. Key areas enjoying rental growth also picked up sharply in the North, South East and Midlands while London and the South West experienced moderate rises.
RICS north operations director, Jennifer Welch, said: “While banks remain cautious about offering loans, demand for rental property will continue to increase with many would-be buyers unable to make the jump to home ownership.
“Established investors continue to reap the benefits of the current uncertainty in the housing market and have been enjoying the fruits of rising rents, but new investors are struggling to get the necessary finance to enjoy this buoyant sector. However, some landlords at the margins may desert the market after the drop in capital gains tax occurs in April.”
