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Rental property demand "up sharply"

27 August 2003
Demand for rented property has risen sharply because people are being priced out of the property market, according to the latest survey.

The Royal Institute for Chartered Surveyors (RICS) found that demand for lettings had increased in all regions, boosted by the uncertainty on which way the property market is going.

RICS highlighted that demand has also been driven by the number of first time buyers being priced out of the market and choosing to rent instead.

The high demand for rental property has helped hold rents steady for the second quarter in a row, which follows slight falls over the preceding year.

The survey showed that rents rose in most regions, though in the southeast, rents fell slightly, and in London, rents showed another sharp decline, having fallen continually for two years now.

However, the recent interest rate cut by the Bank of England has increased investor interest in rental properties. New instructions received to let residential property rose sharply, and at the fastest pace in a year.

RICS residential lettings spokesman, Jeremy Leaf, commented, "Fears of a collapse in the housing market have evaporated and interest rates remain low, bringing more buy-to-let investors on to the market."

London still remains the most expensive place to rent. The average rent in the capital was £1,560 per calendar month compared to £700 across the whole of the UK.

Surveyors expect rents to rise over the quarter to October 2003, but only a small rise is anticipated.

The survey revealed that rental expectations are positive for most regions over the coming months. In the south east, rents are only expected to show a small rise, whilst in the south west, surveyors are expecting a small fall in rents. London is expected to see a slight decline in rental values as pressures on jobs and bonuses from the financial sector reduce demand in the capital.