Money News
Demand for rental properties has continued to grow as landlords have seen their yields increase. However, access to the buy-to-let market has become harder for would-be-landlords as mortgage products have become scarce, according to the latest RICS (Royal Institution of Chartered Surveyors) Lettings Survey.
Figures show that 16% more Chartered Surveyors reported a rise than a fall in tenant lettings, down from 20% in the last quarter.
Significantly, demand for family homes still remains stronger than for flats due to an oversupply of new build. Meanwhile, 23% more surveyors reported a rise than a fall in demand for houses compared to 12% of surveyors who reported a rise in demand for flats, down from 15% last quarter.
Elsewhere, new landlord instructions (an indicator of supply) declined for the first time in the survey's history (1998).
The credit crunch has restricted the number of buy-to-let mortgages approved as well as the number of mortgages available to investors. However, established investors are reaping the benefits - gross yields increasing at their fastest pace since Q3 2005. And it's these rising yields that may have stopped the recent retreat of landlords from the market - the percentage of landlords selling their properties when tenant leases expire falling from 6.5% to 4.6%.
Rental expectations have also picked up sharply and are more than double the survey's long run average. Key areas enjoying significant rental growth have included the North, South East and Midlands. London and the South West have seen more moderate gains.
RICS spokesperson Barry Hall commented: "While banks remain cautious about offering loans, demand for rental property will continue to increase with many would-be-buyers unable to make the jump to home ownership.
"Established investors continue to reap the benefits of the current uncertainty in the housing market and have been enjoying the fruits of rising rents, but new investors are struggling to get the necessary finance to enjoy this buoyant sector."
06 March 2008 © Moneyextra.com
Moneyextra.com recommends you should consider taking independent financial advice before acting on any article. Please contact us for help with your individual circumstances if any assistance is required.