19 August 2008 / by Rebecca Sargent
Landlords are one of the only groups profiting from the credit crunch as potential home buyers are forced to rent as a result of the mortgage market constriction.
New figures from the Royal Institution of Chartered Surveyors (RICS) have revealed that the rental market is booming as the rest of the housing market prepares itself for the impending recession, as predicted earlier this week.
According to RICS, 43 per cent more chartered surveyors reported a rise in new landlord instructions, compared to 35 per cent in the previous quarter. In fact new instructions to let houses and flats rose at the fastest rate since the RICS Residential Lettings Survey began.
The survey also found that frustrated vendors have been forced to place properties on the rental market as sales activity on the housing market has all but dried up.
Furthermore, the number of tenants in the market has risen by 37 per cent, compared to 30 per cent last quarter. And, as would-be buyers are turned away by cautious mortgage lenders, family homes are the most popular with tenants, as 43 per cent more surveyors reported a rise in demand for houses to rent, compared with a 34 per cent rise in demand for flats.
And, as more Brits turn to rental accommodation, landlords are increasing rents accordingly. Consequently, the number of landlords now looking to sell their property has fallen to just 2.1 per cent, which is the lowest figure on record.
Speaking of the changing housing market, RICS spokesperson James Scott-Lee, said: “The lettings market is booming with many vendors opting to rent their property while sales in the housing market continue to dry up.
“Many are willing to ‘hold’ and await the return of capital appreciation. Becoming a landlord is now an increasingly profitable option with rising rents and yields offering good returns.
“Established investors have been reaping the benefits of the housing downturn for sometime and will continue to do so in the short term. However, ever increasing supply could have an impact on rental growth as tenant options increase.”
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