Residential rents pick up at fastest rate in four years

RESIDENTIAL rents have picked up at their fastest pace in four years, latest research from the Royal Institution of Chartered Surveyors reveals.

The RICS’ lettings survey for the quarter to July shows tenant demand for rented property continuing to rise, having held firm over the previous quarter.

Demand is strongest for flats as prospective first-time buyers still struggle to get onto the property ladder despite a subdued sales market.

Levels of newly available rented properties have also picked up after stagnating in the previous quarter, though this increase is slight and not enough to cap rents.

RICS says this is a sign that more buy-to-let investors are entering the market.

Existing landlords are also less likely to sell when tenants’ agreements expire. Landlords are reported to be exiting the market at half the rate they were leaving this time last year.

The move toward increasing rents continues to lift gross yields, the second consecutive quarter this trend has been noted.

But renewed growth in new investor instructions will increase the supply of available property and this has led surveyors to tone down their predictions of growth in the sector.

Surveyors’ expectations for rent rises have decreased across all regions other than London and the South West. RICS says there is little prospect of short-term rent falls as tenant demand remains strong.

Jeremy Leaf, spokesman for RICS, says: “The return of buy-to-let investors to the market is a result of their belief that interest rates have peaked.

“They may also have been encouraged by the fact that the housing market is subdued but has not collapsed despite widespread public fear it might.

“August’s base rate cut is unlikely to reduce tenant demand as tough affordability in the housing market means renting remains the only realistic option for many.”