Rental falls slow as supply starts to dwindle

RICS residential lettings survey May to July 2009.

A slowdown in the number of properties coming on to the rental market saw the rate at which rents decreased ease slightly in the three months to July, says the latest RICS Lettings Survey published yesterday

The net balance of Chartered Surveyors reporting falls rather than rises in rents narrowed to 29 percent from the historic low of 55 percent recorded in the previous three month period. The main driver for this improvement in sentiment is a reduction in the number of respondents seeing the level of new instructions increase.

Only a net balance of 6 percent of Chartered Surveyors felt that the level of new instructions was still rising rather than falling, compared with 21 percent in the previous period. This may be the first indication that the stabilisation in the residential sales market is having an impact on the number of accidental landlords entering the lettings sector.

Demand for property is still increasing, albeit at a slower pace, with 12 percent more Chartered Surveyors reporting a rise rather than a fall in the number of people looking to rent, slightly lower than the 16 percent recorded in the February to April report.

The outlook for rents is steadily improving offering some encouragement for landlords, with the rental expectations net balance reaching -6 percent, up from the previous reading of -25 percent and offering the best reading since the spring of 2008.

The number of properties coming onto the rental market has slowed as the sales market has begun to stabilise. This is good news for landlords, who were coming under pressure to reduce rents as a result of oversupply. The need to respond in this way is easing and providing the housing market holds firm, the outlook for the rental market should continue to improve."
Jeremy Leaf, RICS Spokesperson