A new report by the Royal Institution of Chartered Surveyors (RICS) has revealed that the UK’s lettings market is currently experiencing a frenzied competition for rental properties, which is driving up prices. The research shows that demand from tenants in the sector has reached a five-month high and is strong across all parts of the country, while the number of new landlords entering the market has declined.
This is causing a demand and supply imbalance, which is expected to result in increased rent prices in the near future. According to the report, 59% of surveyors believe rents will rise in the next three months, up from 45% in the previous survey.
Property professionals have described the market as ‘frenzied,’ due to fierce competition for too few properties, which they attribute to years of ill-judged government policy in the private rented sector. Some buy-to-let landlords are reportedly considering leaving the market, as increased costs, taxes, and administrative burdens are taking their toll. The report also indicates that all parts of the UK are set to see an increase in rent prices over the next year.
Meanwhile, the report found that demand for housing sales has fallen for the 11th month in a row in March. However, surveyors were less downcast than in February, as they expect interest rate rises to come to an end, marking the first time in over a year that the proportion of surveyors expecting sales to pick up in the next 12 months was positive. The proportion of professionals who noted a decline in house prices also slowed for the first time in 10 months.
Simon Rubinsohn, RICS’s chief economist, said that while there is still an overall tone of caution among surveyors regarding the sales market, there is a sense that the medium-term outlook is looking more settled. This is due in part to the perception that the interest rate cycle may be near its peak. However, the report notes that many buyers are still watching the market and remaining cautious, and that only the right properties at the right price are currently selling.