The latest RICS Residential Lettings Survey shows that while UK rental prices continued to increase in the three-month period, they did so at the slowest pace in two years, with a net balance of +13% of surveyors reporting rises in rental values, down from 21% in the previous three months.
Meanwhile 19% more respondents reported rises rather than falls in interest from prospective tenants.
RICS says that while this remains a relatively strong reading, it appears that the rental market is beginning to level out with tenants less willing to pay increasing rents.
And it says that with increasing numbers of first-time buyers looking to beat the end of the Stamp Duty holiday on March 24, some tenants are turning to the sales market, slowing the pace of rental growth.
The survey also shows that supply to the market remained in positive territory for the fourth consecutive quarter, with 8% more respondents reporting rises rather than falls in new instructions.
Meanwhile 4% of landlords chose to place their property on the sales market in the three months to January, which RICS says marks a significant increase from the previous quarter’s reading of 2.6%.
Looking ahead, chartered surveyors expect growth in rental values to continue to slow. Some 14% of respondents predicted rises rather than falls in prices, down from 24%in the previous quarter.
Michael Newey, spokesman for RICS, says: “With many potential first-time buyers having been forced into rented accommodation due to problems with obtaining affordable mortgage finance, rental prices have grown quickly across much of the country in recent times. However, it seems that tenants may be becoming less willing to meet increasing rental values.
“While still growing, demand from potential tenants is also beginning to slow. With a recent upturn in buyers entering the sales market prior to the expiry of the Stamp Duty holiday later this month, it seems that those who are in a position to get a foot on the property ladder may have chosen now to do so.”