Residential Rent Rates Expected to Increase Next Year

On Wednesday, December 2nd, the Royal Institution of Chartered Surveyors published the results of its letting survey, according to which rents rates on residential property in the UK are expected to rise in 2010. The survey suggests that residential rent rates will rise to high levels, which have not been seen for more than a decade, as a result of a decreased number of properties on the UK letting market. It has also been marked by RICS specialists that this will be the first rise in rent rates since July 2008. Experts of the Royal Institution of Chartered Surveyors named the decreased number of let properties as the number one reason for a sharp increase in rent rates. The survey revealed that the number of accidental landlords – homeowners who were unable or unwilling to sell their properties at low prices and turned to the rental market instead – shrunk significantly as house prices started to rise in the past months, leaving more space for professional landlords. Meanwhile, the opportunity for tenants to pick and choose between properties and to bargain over rent rates also almost disappeared as the choice of rental properties had dwindled. According to the survey, 11% of RICS agents reported a decrease rather than an increase in the number of instructions from landlords. Jeremy Leaf, a spokesman for the Royal Institution of Chartered Surveyors, said that in the opinion of the organisation, the latest improvements on the UK housing market seem to have a more positive effect on the rental rather than on the residential sector. He also highlighted that the decrease in the number of accidental landlords made the buy to let sector more balanced as the oversupply of properties evened out. Despite the fact that the supply of rental properties shrunk, the demand for them remained as strong, with London topping the list. Other regions of the UK also saw an increase in tenants’ demand, which is almost twice as high for houses as for flats.