Finally some good news for beleaguered landlords. According to the latest RICS Lettings Survey, the supply of new properties coming on to the rental market has fallen for the second consecutive quarter possibly bringing an end to the downward trend in rents that has been in place since the autumn of 2008. The report says, the net balance of agents reporting rising rather than falling rents in the three months to January 2010 was zero. This follows five quarters of negative readings, and is in marked contrast to April last year when 58 per cent more agents were reporting falling rents, an all-time low for the survey.
In addition, expectations as to the outlook for rents continues to strengthen with a net balance of 33 per cent of respondents believing rents will to rise over the coming quarter (up from 22 per cent). The more positive picture for rents can be attributed to the continued decline in supply of both flats and houses in the marketplace. Twenty-three per cent more agents reported a fall rather than a rise in the number of new landlord instructions for this period, up from 18 per cent in the previous quarter. Demand remains strong with 16 per cent more respondents still seeing it rise than fall. Would be first-time buyers, unable to get a foot on the property ladder, are still a major source of increasing demand for good rental properties. Houses remain more popular than flats and it is the supply / demand imbalance in this market that is also helping to push rents higher.
In Norwich, it is becoming clear that movements in the housing market are affecting lettings: our estate agency colleagues have seen a steady increase in the number of new instructions coming on to the market over the past few months, whilst simultaneously most of the letting agencies in the city, at least anecdotally, are saying the number of properties available to rent has decreased.
This is a clear sign the accidental landlords are returning to the sales market. If demand remains strong, which it is likely to as many first time buyers are still finding themselves priced out of the housing market, then rents should continue to rise as would be tenants compete for fewer properties.
So good news for landlords, potentially, provided events in the wider economy don’t take a turn in the wrong direction. Bad news for tenants who for the last 18 months or so have had the best of both worlds; declining rents and better quality properties being available. Bad news too for Letting Agents – in Norwich alone, there has been a wave of new agents coming into the lettings market on the back of the decline in sales. With more people chasing fewer properties there’s going to be some fall out!
My advice to landlords; don’t assume your letting agent is financially secure – check them out! One tell tale sign of problems is a delay in rent being paid over to you. Have a look at my previous blogs for more info on this.
Mike can be contacted on 01603 766860.