Rics reports fall in tenant demand

30-May-2007

Demand for lettings in the first quarter of 2007 fell by its biggest level since the first quarter of 2005 due to house buyers opting for a return to the market, research from the Royal Institution of Chartered Surveyors (Rics) has shown.

The Rics Lettings Survey found that 16 per cent more chartered surveyors saw an increase as opposed to a decrease in tenant lettings, compared to 28 per cent in October of last year.

Meanwhile, the proportion of landlords selling their properties has now reached its highest level in two years. While the figure remains at just 5.2 per cent, this represents an increase of more than a single percentage point.

"Housebuyers are returning to the market to avoid rising borrowing costs, signalling a drop in demand for rental property. With more supply on the market due to a rush to avoid the upfront costs of Hips, which now seems a little premature, buyers have found the market less tight than expected," advised Rics spokesperson Jeremy Leaf.

But the survey also predicts that rental rates will reach near record levels in the next quarter as the effect of recent interest rate rises takes hold.

Last week the National Association of Estate Agents (NAEA) advised that young professionals were increasing rental returns via their desire to purchase expensive new-build properties.

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