Lack of finance is holding landlords back, warns RICS

John Heron

The latest lettings survey from the Royal Institution of Chartered Surveyors shows that while rents are up for the second consecutive quarter, difficulty in securing buy-to-let loans is continuing to contri-bute to a lack of supply.

Some 27% more surveyors re-ported a rise in rents rather than a fall. A year ago 29% more surveyors reported falling, and not rising, rents.

But trouble with obtaining buy-to-let mortgages is leading to the lack of supply, which has now fallen for four consecutive quarters, although at a slightly slower pace.

In the run-up to July the net balance of surveyors reporting a fall in landlord instructions was -6, in comparison with a net balance of -12 in the previous quarter.

But just 4.1% of landlords say they intended to sell their properties at the end of a tenancy agreement.

One-third more surveyors expect rents to rise over the next quarter rather than fall, with rents for houses expected to mar-ginally outperform flats.

RICS spokesman James Scott-Lee says: “Supply of lettings property continued to fall in the three months to July although at the slowest pace in a year which has helped propel rents higher for the second conse-cutive quarter. Landlords may still be struggling to access finance des-pite improved conditions.

John Heron, managing director of Paragon Mortgages, says the RICS figures echo what he has been saying for some time – that the private rented sector has to expand to meet tenant demand.

He says: “With fewer owner-occupier mortgages available, limi-ted resources in social housing and wider social and demographic changes such as a growing popu-lation and rising numbers of single person households, we are entering the age of renting.

“Unless the private rental sector is able to meet this demand, rent inflation is likely.”