homeowners turn to lettings

Homeowners are increasingly letting their properties to take advantage of rising yields. New instructions to let property increased significantly in the first quarter of 2008 research by RICS revealed.

The increase in letting has been stimulated by the drop in demand in the housing market and sellers have retreated to renting. The net balance of chartered surveyors reporting a rise in new landlord instructions increased by 29 percent compared to -2 percent in the previous quarter.

Demand for family houses and flats has increased as would-be buyers find it impossible to step-up the property ladder. This increase in demand has driven an increase in yield, which in turn has stemmed the tide of landlords leaving the market.

RICS spokesperson James Scott-Lee commented: “The sales market’s loss is the lettings market’s gain. Some would-be sellers are retreating from selling and letting or re-letting their properties as they wait for mortgage lenders to offer buyers more favourable lending criteria. While transaction numbers in the sales market are weak, many are taking advantage of rising rents and yields in the private lettings sector.”

Rents are still rising and rental expectations are at double the survey’s long run average. The largest rental growth is in the South East and South West, while London has been the weakest area for rental growth.

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