March 16, 2010 12:44 pm

Rents rise as property supply falls

The rental market is seeing signs of a recovery with rising rents, after the number of homes available to let fell for the second quarter in a row, according to the latest RICS Lettings Survey.

A third more surveyors said they expect the cost of renting a property to rise during the coming three months than those who think it will fall. These expectations have been driven by a continued decline in the supply of flats and houses available to let, as homeowners who were forced to rent out their properties after being unable to sell them, are putting them back on the market again.

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The latest report bucks the trend of five consecutive quarters showing falling rents, and the figures are in stark contrast to April last year when 58 per cent of surveyors reported falling rents.

Across the regions, tenant demand was strongest in the south-west, while London was amongst the number of regions seeing moderate demand.

”It is becoming clear that movements in the housing market are affecting lettings,” said Jeremy Leaf, RICS spokesman. “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.”

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