Rental market supply tightens as the accidental landlords finally decide to sell

The number of rental properties coming on to the market is falling quickly, leading to less choice and potentially higher rents for those priced off the housing ladder.

The Royal Institution of Chartered Surveyors (RICS) reported that 6 per cent more estate agents reported a rise rather than a fall in new instructions from landlords in the three months to July 31, down from 21 per cent in the previous three months.

RICS attributed the slowdown in property to let to the disappearance over summer of “accidental landlords” — owners who choose to let rather than sell properties to raise finance. The number of accidental landlords rose at the end of last year as property prices tumbled, but has since tailed off as evidence of price stability in the housing market has encouraged owners to sell instead.

A spokesman for the RICS said: “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.”

The industry body said that rental prices, which had been falling, were starting to stabilise. The balance of surveyors reporting a fall rather than a rise in rents was 29 per cent in the quarter, compared with 55 per cent in the three months to April.

In an optimistic sign for buy-to-let landlords, an increasing number of agents expects rents to rise in the coming months. The balance expecting a fall rather than a rise improved from 25 per cent to 6 per cent, RICS said.

The RICS spokesman said: “The number of properties coming on to 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.”

However, the change in sentiment will put those searching for affordable accommodation at a disadvantage.

Keatons, a Central London-based agent, said the demand and supply imbalance was leading to property being let soon after it came on the market.

The RICS said the demand for flats rose at a faster pace than demand for houses between May and July, with 12 per cent more surveyors reporting a rise rather than a fall in demand for flats, compared with 5 per cent reporting a rise rather than a fall for houses.

FindaProperty.com, the search website, said that those looking to rent family homes faced less choice and higher rents. The asking rents for houses rose by 2.5 per cent in the past quarter, after a fall in supply of houses to rent of 16 per cent, according to the website’s latest figures.

About 60 per cent of rented accommodation is made up of houses rather than flats, according to the latest Survey of English Housing.

Further evidence of the growing demand for a cheaper alternative to homebuying came as Hyde, one of the UK’s biggest housing associations, reported its highest number of monthly sales in the last year during July.

Figures from the RICS, due next week, are expected to show that housing market activity continued to improve in August. Howard Archer, of Global Insight, said: “Latest data and survey evidence have consistently pointed to modestly but steadily improving housing market activity, and at least a temporary firming in prices. Indeed, prices seem likely to firm further in the near term.” (Rebecca O’Connor, The Times) http://www.timesonline.co.uk/tol/money/property_and_mortgages/article6825391.ece

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