The cost of renting a home has risen by over four percent in the last year, according to the RICS Residential Lettings Market Survey, with many would-be buyers continuing to find themselves locked out of the sales market.
The cost of renting a property has grown by 4.3 percent over the last twelve months, according to chartered surveyors across the UK. Given the problems affecting the sales market, perhaps unsurprisingly, this trend looks set to continue as respondents also predict rents to continue to grow by almost four percent (3.9) over the next year.
The upward march in rents continues to be underpinned by a shortage of good quality properties for tenants to move into. In the three months to July, the amount of new properties coming on to the market was little changed compared with the preceding period; a net balance of two percent more surveyors reporting falls in new instructions to market.
Meanwhile, demand continues to grow, albeit at a much slower pace than in recent quarters, as four percent more respondents reported rises rather than falls in interest from potential tenants (from +14 percent). Significantly, the increase demand has outpaced the change in supply in every quarter since the first half of 2009 although the gap does now appear to be narrowing.
Across the country, strong regional variations were apparent. The North West saw rents increase by the biggest margin with values growing by 6.9 percent, whereas surveyors in Wales reported that rents had in fact stayed at the same level over the last twelve months.
Unsurprisingly, with rental values steadily increasing, gross yields have continued to edge upwards during the early part of the year, which has contributed to fewer landlords (3.3 percent) opting to sell their properties at the end of the tenancy.
Peter Bolton King, RICS Global Residential Director, commented: “It is interesting to see that the huge growth we have seen in demand in recent years has started to gradually slow. While tenant interest is still riding high, what remains to be seen is whether many are willing to meet the increasing rents being demanded by landlords. However, it is clear that we have seen rents grow steadily right across the UK for some time. This is partly down to the problem of the scarcity of mortgage finance and the large deposits required by lenders. These barriers to home ownership need to be addressed alongside the shortage of new stock coming to the market.”