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Lettings boom sparked by weak property market

Catherine Deshayes

 
A record number of would-be property sellers are opting to let instead as the housing gloom continues, a new survey suggests

As new instructions to sell continue to fall, instructions to let are on the up, with The Royal Institution of Chartered Surveyors' (RICS) latest research showing that 43% more chartered surveyors reported a rise than a fall in landlord instructions compared to 30% in the previous quarter.

New instructions to let houses and flats were also on the up, rising at the fastest pace in the survey's history, with almost half of chartered surveyors reporting an increase.

Frustrated vendors have been placing their property on the market to let as they have been unable to agree sales due to a lack of demand in the housing market.

The study also found that rents have continued to rise while house prices have fallen, driving gross yields upwards, and rising profits have kept landlords committed to the market.

RICS' spokesperson James Scott-Lee said: "The lettings market is booming with many vendors opting to rent their property while sales in the housing market continue to dry up. Many are willing to 'hold' and await the return of capital appreciation.

"Becoming a landlord is now an increasingly profitable option with rising rents and yields offering good returns.

"Established investors have been reaping the benefits of the housing downturn for sometime and will continue to do so in the short term. However, ever increasing supply could have an impact on rental growth as tenant options increase," Mr Scott-Lee added.

Most landlords were holding onto their properties, with the number of landlords opting to sell at the expiry of their tenant's lease falling to 2.1%, the lowest level on record.

Although there was an improvement in new buyer enquiries since June, this figure was still falling.

Picture by umjanedoan