Lettings showing signs of recovery as rents increase

ALMOST a third more landlords saw home rental rates rise in the past three months than those who reported falls, signalling a sharp recovery in the residential lettings market, according to the Royal Institution of Chartered Surveyors (RICS).

RICS said 30 per cent more of its UK members reported increasing rents in the three months to April, compared to those who said prices weakened. That compared to an equal number of respondents reporting rising and falling rents in the last quarter.

Last year, in the depths of the financial crisis that deflated the housing market bubble with a bang, a record 58 per cent more surveyors reported falling rents.

RICS said the improved outlook for rents was at least partly down to the declining supply of flats and houses in the marketplace, after many so-called “accidental landlords” put their properties up for sale to benefit from the nascent housing market recovery.

“With sellers back in the housing market, supply has fallen back in the lettings sector,” said RICS spokesman Jeremy Leaf. “This is good news for landlords as rents are set to move higher in the coming months and yield returns are likely to improve.”

But he added: “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 regime.”

A balance of 36 per cent of surveyors expect rents to continue to rise in the near future, according to RICS.