Rental income on wane as homeowners stoke up supply by letting rooms

The housing market

Hard-up homeowners trying to let a spare bedroom is being pinpointed as one of the factors keeping down rental prices, says Spareroom.co.uk.

The website, which matches prospective landlords with tenants, conducts a monthly survey of the rental market. It found that average prices in the UK fell 0.5 per cent during December. While year-on-year rents were 4 per cent higher, Matt Hutchinson from the website said the rental market is looking particularly weak and is likely to remain so through 2009.

"Multiple factors are affecting demand for rental properties," he explained. "The number of overseas workers coming to the UK has plummeted owing to the weak pound and a tough jobs market. And companies are no longer moving employees around the country to the same extent: a key driver of the market.

"Added to this, 27,000 more homeowners took in a lodger last year to cope with pressures on household income and meet mortgage repayments. We expect at least another 35,000 households to take in a lodger this year, adding to the supply."

As a result of all this, Mr Hutchinson continued, "rents are likely to be under pressure for some time".