The cost of renting a home in the UK has risen by over 4.3% in the last year as many would be buyers continue to find themselves locked out of the sales market, according to the latest Residential Lettings Survey from the Royal Institution of Chartered Surveyors.
Given the problems affecting the sales market, perhaps unsurprisingly, RICS says that this trend looks set to continue as respondents also predict rents to continue to grow by 3.9% over the next year.
The upward march in rents continues to be underpinned by a shortage of good quality properties for tenants to move into. In the three months to July, the amount of new properties coming on to the market was little changed compared with the preceding period; a net balance of 2% more surveyors reporting falls in new instructions to market.
Meanwhile, demand continues to grow, albeit at a much slower pace than in recent quarters, as 4% more respondents reported rises rather than falls in interest from potential tenants.
Significantly, the increase demand has outpaced the change in supply in every quarter since the first half of 2009 although the gap does now appear to be narrowing.
Across the country, strong regional variations were apparent. The North West saw rents increase by the biggest margin with values growing by 6.9%, whereas surveyors in Wales reported that rents had in fact stayed at the same level over the last twelve months.
Unsurprisingly, with rental values steadily increasing, gross yields have continued to edge upwards during the early part of the year, which has contributed to fewer landlords, 3.3%, opting to sell their properties at the end of the tenancy.
‘It is interesting to see that the huge growth we have seen in demand in recent years has started to gradually slow. While tenant interest is still riding high, what remains to be seen is whether many are willing to meet the increasing rents being demanded by landlords,’ said Peter Bolton King, RICS global residential director.
‘However, it is clear that we have seen rents grow steadily right across the UK for some time. This is partly down to the problem of the scarcity of mortgage finance and the large deposits required by lenders. These barriers to home ownership need to be addressed alongside the shortage of new stock coming to the market,’ he added.