Residential rents have picked up at their fastest pace in four years, the Royal Institution for Chartered Surveyors’ latest lettings survey has revealed.
Tenant demand for rented property continues to rise in the quarter to July, 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 new available rented property have picked up after stagnating in the last quarter, though the increase is slight and not enough to cap rents.
More buy-to-let investors are entering the market. Existing landlords are also less likely to sell when tenants’ agreements expire. Landlords are exiting the market at half the rate of this time last year.
Increasing rents continue to lift gross yields for the second consecutive quarter.
However, the renewed growth in new investor instructions will increase the supply of available property and has led surveyors to dampen their outlook for growth in the sector.
Surveyors’ expectations for rent rises have decreased across all regions other than London and the South West.
However, there is little chance of short-term rent falls as tenant demand remains strong.
Jeremy Leaf, RICS spokesperson, says: “The return of buy-to-let investors to the market is a result of expectations that interest rates have peaked.
“They may also have been encouraged by the fact that the housing market, though subdued, has not collapsed, despite widespread fears it would do so.
“August’s interest rate cut is unlikely to reduce tenant demand as tough affordability means renting remains the only realistic option for many.”