The survey showed tenant demand for rental property continued to rise in the quarter to July, having held firm over the previous quarter. It reported that demand is strongest for flats as prospective first-time buyers still struggle to get onto the property ladder, despite a subdued sales market.
Levels of new available rental property have picked up after stagnating in the last quarter, though the increase is said to be slight and not enough to cap rents.
More buy-to-let investors are entering the market and existing landlords are also less likely to sell when tenants’ agreements expire. Landlords are exiting the market at half the rate of this time last year.
Increasing rents continue to lift gross yields for the second consecutive quarter. However, the renewed growth in new investor instructions will increase the supply of available property and has led surveyors to dampen their outlook for growth in the sector.
Jeremy Leaf, spokesperson for RICS, said: “The return of buy-to-let inves-tors to the market is a result of expectation that interest rates have peaked. They may also have been encouraged by the fact that the housing market, though subdued, has not collapsed despite widespread fears it would do so. August’s interest rate cut is unlikely to reduce tenant demand as tough affordability means renting remains the only realistic option for many.”
Andrew Heywood, senior policy officer at the Council of Mortgage Lenders (CML), commented: “Our half-yearly figures suggest the market is in robust shape and the recent cut in interest rates by the Bank of England will serve to buoy up the sector in the coming months.”
John Heron, managing director at Paragon Mortgages, said despite a cooler summer market, landlords remain cautious yet opportunistic buyers.
