Tenant demand still on the rise as RICS calls for Budget help

The latest market snapshot from the Royal Institution for Chartered Surveyors - out today - shows tenant demand continuing to increase with a net balance of 32 per cent of surveyors reporting a rise.

The snapshot also says: “Significantly, landlord instructions continue to decline, although at a lesser pace than in the recent months at minus 13 per cent. 

“Inevitably, given the ongoing imbalance, the headline rent expectations reading remains at a relatively high level of 45 per cent. Moreover, this pattern is repeated across much of the country.”

In addition to its market snapshot, RICS makes an impassioned plea to government for landlords to be given cash help and policy clarity on future energy efficiency regulations.

Its senior public affairs officer, Sam Rees, says: “Ahead of the UK budget on 15 March, RICS is emphasising the critical role housing has to the UK economy, and the need to boost supply through new builds and commercial property conversions where appropriate whilst conforming to the strictest standards.

“RICS supports efforts to improve the energy efficiency of homes and the continuation of the government’s Energy Price Guarantee. Further fiscal intervention for consumers and businesses is required to scale up the retrofitting of UK homes and we welcome initiatives such as ECO+ that go some way in delivering such needs.

“With rising rents and diminishing housing stock in the private rental sector, the government must do more to support landlords who are leaving the market due to increasing cost and regulation challenges.

“Landlords continue to raise concerns with RICS on the lack of clarity and financial support from government to meet expensive energy efficiency improvement targets which is further pressuring landlords into exiting the sector.

“RICS would also encourage the government to restore the Local Housing Allowance to the 30^th percentile to support those private renters who are struggling with rising rents.”

Elsewhere in the RICS report, there appears to be some sign that the housing market sales downturn may be less severe than many have expected.

This reassuring prospect is also evident in some of the anecdotal remarks from survey participants stating how a more optimistic February has given the housing market some hope for the coming months after a sluggish start to the year.

Most significantly, the headline reading for ‘new buyer enquiries’ rebounded to a net balance of minus 29 per cent - much better than the minus 45 per cent recorded in January. While this metric is still signalling a decline in demand, and represents the tenth consecutive negative monthly reading for new buyer enquiries, it is also the least negative result since July 2022.

The ‘new sales’ indicator was also less negative in February, improving from a net balance of minus 36 per cent to minus 26 per cent. However, the average time taken to complete sales continues to rise and is now approaching 19 weeks.

In an additional question included in the latest survey, RICS analysed the difference between the asking price and sales price in the current macro climate. 

In the mainstream market (covering prices up to £500,000), around 60 per cent of surveyor respondents suggested that prices were being agreed at below the asking price. 

For properties priced between £500,000 and £1m, the share jumped to just over 70 per cent.