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Tenant demand revived by soaring house prices

Chartered surveyors are reporting the biggest increase in tenant demand in four and a half years, with 27% more reporting a rise in new lets than a fall. This is partly due to a renewed upturn in house prices, pushing potential buyers (particularly first time buyers) back to the rental market.

Confidence in the rental market has been steadily increasing. Rents have risen for both flats and houses and are currently above the survey's long run average. However, surveyors are expecting a slowdown in rental increases for larger properties, said the Royal Institution of Chartered Surveyors today.

Investor landlords are more confident and more active in the market, leading to a rise in the number of available properties to-let. Tenants are faced with more choice than they have seen for two years.

Last August's interest rate cut made property more attractive, encouraging many new investors into the residential market. It is clear that individuals are still using buy-to-let to secure their pension futures, even though these have not been allowed into the government's Self-Invested Personal Pensions (SIPPs) schemes. Only 5% of landlords have sold their buy-to-let investment as opposed to 7% in the same period last year.

RICS spokesperson Jeremy Leaf commented, "Buy-to-let investors are active once again, which will help dispel fears that an absence in first time buyers will contribute a significant slowdown in the wider housing market next year."