Residential rents are set to rise next year as the number of properties put up to let dwindles to levels not seen since 1998.
According to the latest survey of the lettings market from the Royal Institution of Chartered Surveyors, rents are expected to rise for the first time since July last year. The drop-off in properties coming on to the rental market was cited as the main reason for the change.
Accidental landlords, who found themselves renting out their homes because they could not sell, have been rushing to take advantage of the recovering housing market, the survey found. At the same time, tenants’ bargaining power with landlords is falling as the number of properties to choose from contracts. A net balance of 11 per cent of agents reported that the number of instructions from landlords was falling rather than rising.
A spokesman for the institution said: “It seems the current upward trend in the housing market is having a more significant effect on the lettings market, with many of the accidental landlords returning to the sales market to take advantage of the recent price increases.
“As a result, the oversupply is reversing, with new instructions at the lowest we have ever seen. This, of course, is impacting on prices and tenants no longer have as strong a bargaining power as they did.”
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However, demand for rental property is still rising. Demand is strongest in London and has increased in most other parts of the country, bar the East of England.
The demand for houses increased at almost twice the rate as demand for flats, according to the survey.