A lack of supply is pushing rents higher, signalling a revival in the lettings market, says the latest RICS Lettings Survey. The net balance of chartered surveyors reporting rising rather than falling rents rose from zero to 30 per cent - a marked contrast to April last year, when 58 per cent more chartered surveyors were reporting falling rents, an all-time low for the survey. Surveyors are optimistic that rents will continue to rise with the rental expectations' net balance climbing to 36 per cent - the highest figure recorded in the survey's history.
The more positive picture for rents can be attributed, in part, to the continued decline in the supply of both flats and houses in the marketplace. Some 12 per cent more chartered surveyors reported a fall rather than a rise in the number of new landlord instructions for this period. The upturn in the housing market has tempted many of the accidental landlords to sell up, with new instructions for sale on estate agents' books now rising. However, one consequence of the turnaround in the rental trend is that the net balance of surveyors reporting that gross yields are increasing has turned positive for the first time in a year.
Significantly, demand for property to let remains strong with 30 per cent more respondents still seeing it rise than fall, the strongest reading since January 2009. Houses remain marginally more popular than flats, but flats too but are starting re-establish their appeal.
Jeremy Leaf, RICS spokesperson, comments: "With sellers back in the housing market, supply has fallen back in the lettings sector. This is good news for landlords, as rents are set to move higher in the coming months and yield returns are likely to improve. Moreover, the news that buy-to-let specialists are beginning to lend again may also encourage investors to return to the market. However, the prospect of higher capital gains tax on the sale of property may in the near term encourage some existing landlords to take advantage of the current, more benign, tax régime."
There are new landlords coming into the market from abroad, says Prime Purchase. In expectation of the effects of 50 per cent tax rates, a bonus levy and a continuing threat to the status of non-doms, property owners who can move are taking the opportunity to explore the market. At the same time, owners of properties over £1 million that will be affected by a new five per-cent stamp duty tax are now bringing properties to the market, says Prime Purchase. Meeting the demand for these properties are investors who are seeing stronger rental growth, with yields predicted to continue rising by the end of the year and who sense that exchange rates between the dollar and sterling will remain low. Investment buyers from South East Asia and Hong Kong, in particular, are an increasing presence.
Guy Meacock, of Prime Purchase in London, says: "Chinese buyers are starting to see the value that a buying agent can add in terms of market insight and intelligence."
Among properties on the rentals market, a seven-bedroom detached house on the outskirts of Hampstead is to let through Knight Frank at an asking price of £2,650 per week. This house features seven double bedrooms, four bathrooms, a double reception room, eat-in kitchen, driveway with parking for three cars and garden. The house is moments away from the amenities of both West Hampstead and Finchley Road. It is available to rent on an unfurnished basis.
Meanwhile, Brian Lack & Co is used to unusual properties but one particular feature in a Buckland Crescent flat has the whole office talking. In pride of place in the spacious, tiled entrance hall is an authentic red phone box. The vintage phone box features a working phone. The newly refurbished, three-bedroom property also has a garden, a conservatory and a double sized reception with dining area. There is a fully fitted kitchen and two bathrooms, one en-suite.
The flat is available fully furnished - including the phone box - for £1,150 per week.
Lettings negotiator Claire Freeman comments: "The phone box complements this flat beautifully. The entrance hall, like the rest of the flat, has generous proportions so can easily accommodate such a large fixture. The iconic phone box brings a smile to the faces of everyone who sees it."