Rental property demand outpaces supply
New tenant demand again outpaced supply of rental property in the three months to July, as many continued to turn to the lettings sector, says the latest RICS Residential Lettings Survey, reports Andrew Oulsnam, Managing Partner of Robert Oulsnam & Company.
As a result of this, rents continued to increase with 34% more surveyors reporting a rise in rents rather than a fall (compared with 42% in the previous three month period). Significantly, the imbalance between demand and supply is though likely to persist with the survey results suggesting that further gains in rents are likely over the coming months.
One of the main drivers of the strong demand for rental property continues to be would-be buyers who have moved to the lettings market after struggling to find mortgage finance, or first-time buyers unable to meet lenders’ deposit requirements. As a result, 25% more chartered surveyors reported a rise in demand than a fall.
However, it is significant that the challenging economic environment is also lending to more tenants relying on assistance from the government. Social lettings are now at their highest level since the series began in 199, at 13% of all new lets (up from 8%). Meanwhile, lettings to private renters continue to make up the majority of lettings, at 66%.
RICS Spokesperson, James Scott-Lee, commented “Strong tenant demand and a limited stock of good quality properties on offer is pushing rents ever higher across much of the country. Moreover, with mortgage finance for the first time buyers likely to remain in short supply for some time to come, this imbalance is set to persist. The inevitable outcome is that rents will continue to increase”