Rents dropped across the residential lettings sector but rental expectations remain optimistic, says the RICS Lettings Survey published this month.
The net balance of Chartered Surveyors reporting falls rather than rises in rents across the UK fell from 48 per cent to 55 per cent, the lowest level in the series’ history (1999). However, here in the South West there are signs of some improvement with 17 per cent less reporting a fall rather than a rise in rents from the previous quarter.
The rental change has been most marked in Scotland where 80 per cent more Chartered Surveyors reported a fall than a rise in rents, down from 58 per cent. Meanwhile in London, the rental market for houses continued to favour tenants. Significantly, surveyors are reporting that gross property yields are now falling for the first time since April 2007, indicating that rents are declining at a more rapid pace than house prices.
Looking forward, the picture looks a little more encouraging for landlords. Rental expectations, though still negative across the UK, have improved markedly. In the South West there are 17 per cent less surveyors anticipating future rental declines rather than increases, compared to 16 per cent nationally.
An interesting development in the latest survey is the increased willingness of landlords to consider selling their property at the expiry of a tenant lease. This has edged back up to 1.8 per cent having fallen to just 0.2 per cent in the three months to January.
Tenant demand for rental property continued to increase nationally, albeit at a slower pace. Here in the South West though demand took a sharp decline as 48 per cent more surveyors reported a fall rather than a rise in new tenant lettings.
The net balances of surveyors nationally reporting new instructions to let both flats and houses (an indicator of supply) are still rising but the pace has started to slow. 17 per cent and 12 per cent more Chartered Surveyors reported a rise than a fall in new instructions to let flats and houses respectively, down from 44 per cent and 49 per cent. Regionally though this combined new instructions figure fell back by 54 per cent.
RICS spokesperson Alison Whitfield commented: “Contrary to the survey findings, although there are variations around the region, locally we are seeing the rental market continue to
be buoyant with a good supply of property available and potential tenants looking. Tenants are viewing a lot of properties and are taking the opportunity to negotiate on rents, which is unusual but definitely becoming more common in the current market.”
