Property shortage pushes rents up

If you're one of the millions of people who currently rent their homes from a landlord, you may have noticed costs have been creeping up. Read on to find out what's going on in the market

 

The FindaProperty rental index last year showed that overall asking prices rose across the UK between June and September 2010 and that the average rent is now the highest it’s been since November 2008.
Rental prices have been steadily rising since January with landlords now asking £47 more a month than at the start of the year – an increase of 5.8 per cent.
There are also fewer rentals out there, with the FindaProperty rental index reporting that stock levels fell by 14.5 per cent between June and September 2010.
Add to this the findings of the latest Lettings Survey from Royal Institution of Chartered Surveyors (RICS), which reveals that the supply of property to rent fell for the third consecutive quarter in the three months to August 2010, and things are looking, decidedly expensive for renters.
So while it’s costing renters more per calendar month than at any time since November 2008, it’s good news for landlords whose rental yields are up on the previous quarter.
The RICs report also found 26 per cent more chartered surveyors reported a fall rather than a rise in the number of new landlord instructions, up from 18 per cent in the first quarter of the year.
Although the weather may have been a factor in this, it is more likely that the upturn in the housing market has tempted many of the accidental landlords away from the rental market, says RICS.
So could this mean an end to the falling values that have been a feature of the rental market since autumn 2008?
There were certainly fewer surveyors reporting declines in the latest quarter: the net balance of those reporting rising rather than falling rents was zero, an improvement on the five previous quarters of negative readings.
And a net balance of 33 per cent of surveyors believed that rents would rise over the coming quarter, up from 22 per cent in the previous report.
Surveyors were also positive about rental demand, with 16 per cent more respondents reporting a rise rather than a fall this quarter.
RICS spokesperson Jeremy Leaf commented: "The RICS housing survey has seen a steady increase in the number of new instructions coming on to the market over the past few months, whilst simultaneously we see with this survey that the number of properties available to rent has decreased.
"This is a clear sign that the accidental landlords are returning to the sales market.
"If demand remains strong, which it is likely to as many first-time buyers are still finding themselves priced out of the housing market, then rents should continue to rise as would be tenants compete for fewer properties."