A shortage of properties available to let continued to push rents higher during the second quarter of the year, according to research by the Royal Institution of Chartered Surveyors (Rics). The ongoing problems in the mortgage market, combined with concerns that house prices are falling again, have led to increased numbers of people looking to rent a home.
But despite interest rates being at a record low, making investing in property attractive, landlords are continuing to face problems getting a buy-to-let mortgage.
Rics said this had led to the number of homes available to rent remaining low, with supply falling for the fourth consecutive quarter during the three months to the end of June. Overall, 6 per cent more surveyors said they had seen a fall in new instructions compared with those who had seen a rise, although this was down from 12 per cent in the previous quarter.
But at the same time, a balance of 26 per cent of surveyors reported a rise in demand from potential tenants. The group said demand rose across all regions, but was strongest in London and the East.
Unsurprisingly, the combination of falling supply and rising demand led to rents rising for the second quarter in a row, with 27 per cent more surveyors saying the cost of renting a home had increased during the second quarter, compared with those who reported a fall.
Going forward, a balance of 33 per cent of surveyors expected rents to continue rising, with rents for houses marginally outperforming those for flats.
The group said the market was now very different to a year ago, when rents were pushed down by a flood of properties being made available to let after their owners were unable to sell them. However, Rics' latest housing market survey showed a lack of mortgage funding had stifled demand from buyers, which may force more people to let rather than sell their homes in coming months.