RICS and ARLA say rental boom to continue

Rents rose at a rapid pace in the three months to the end of January, says the latest RICS quarterly letting survey.

The number of chartered surveyors who reported rising rents was the highest positive reading in the survey’s history, which goes back to 1998.

As rents increased, gross rental yields have also risen sharply, having now increased in each of the last four surveys.

The survey also shows that more social tenants are now living in the private rented sector, with the proportion now standing at around 11% – up from 6% last year.

However, the proportion of student lettings has fallen from 9% in the previous RICS survey to 5%.

Supply of rental property to the market continued to decrease, adds the survey.

It says the percentage of stock from private landlords has fallen from over 80% before 2009 to around 70%, indicating the reduced role of the buy-to-let investor over the past couple of years.

Looking ahead, surveyors remain positive that the market will remain buoyant. RICS members in all areas of the UK expect rents to increase, with relatively modest rises in the South-West but much more notable increases in London.

RICS spokesperson Jeremy Leaf said: “The current buoyant state of the rental market is likely to persist for some time to come, given the challenges facing the sales market.

“It is unlikely that finance for first-time buyers will become much more readily available, while uncertainty over the economy may also deter potential home buyers.

“As a result, demand for property to rent will remain strong and in all probability will continue to outstrip supply. In this environment, rents will remain on an upward trajectory, adding to the pressure on many households whose incomes are already being squeezed by rising inflation prices and the hike in VAT.”

ARLA agrees that the rental market will stay strong, saying that demand will outstrip supply this year and into next.

Ian Potter of ARLA said: “The private rented sector is taking on the burden created by diminishing housing supply – a trend that will continue for the short to medium term. According to our research, this issue has been identified as UK-wide by our members but is particularly pronounced in the South-East and London.”