London landlords are facing a tough time attracting tenants as a record number of properties are flooding the market, according to the Royal Institute of Chartered Surveyors.
The best-presented property is still finding tenants – but only if the landlords charge a competitive or discounted rent.
The information comes from the RICS quarterly report on the UK rental market, for the period ending January 31.
Rental agents are reporting more property hitting the market in London with fewer tenants seeking homes as jobs for young professionals dry up in the capital.
The additional property swamping the market is mainly coming from people moving home and letting out their houses behind them as they cannot sell or achieve the price they want in the current market.
In London, falls in rent were reported by 76% of agents, while 18% stated properties on their books were experiencing a drop in gross rental yields. In comparison, the national figure reflected a 45% of agents reporting declines in rent but 10% reporting an increase in gross rental yield.
Wandsworth rental agent Ben Temples said: “Property supply has increased 61% over the last quarter, with tenant inquiries down by 23%, rentals have fallen by about 10%”
“We expect the rental market to stabilise in the next quarter with an increase in tenant demand but rental growth is not on the horizon.”
For London landlords, advice from Westminster letting agent James Gubbins was: “Over supply of property means that there is increased competition and properties that are poorly presented or overpriced do not rent.”
“Tenants are confident that they will be able to negotiate rents down further.”
Overall, 42% UK letting agents reported increased tenant lettings rather than a fall, compared to 27% in the previous period.
Rental demand is now increasing at the fastest pace since the survey started in 1998.
But 48% more surveyors reported a fall in rents than a rise, which is the worst figure reported since the survey began.
The survey also shows that landlords are holding on to buy-to-let property when tenancies arise for renewal. Only 0.2% of landlords are opting to sell, which is a new low since these figures were introduced in to the survey in 2003.
From a regional perspective:
- Tenant demand was strongest in the North and weakest in the Eastern counties
- New landlord instructions were strongest in London and the North and weakest in the Midlands and Wales.
- Rent expectations from landlords and letting agents were most negative in London.
Tenant demand was a little stronger for flats than houses for the first time since July 2007.
- For houses, 43% more surveyors reported a rise in demand than a fall, up from 33% in October.
- For flats, 44% more surveyors reported a rise in demand than a fall, up from 25% in October.
New lettings to private individuals increased to 84%. Corporate lettings fell 5% and student lettings by 2%.
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