U.K. Property Rents Set to Surge as Listings Drop, Survey Says
(Bloomberg) -- The cost of renting a home in the U.K. is likely to rise in the next three months as landlords put fewer properties on the market during the coronavirus pandemic, an industry survey shows.
Tenant demand climbed in the quarter to February while new instructions to let out property fell, according to the Royal Institution of Chartered Surveyors. It expects rents to rise 2% this year, and more property appraisers expect growth in the coming three months.
While Covid-19 prompted many people to leave London and keep rents steady there, the outlook is for an increase elsewhere in the U.K. A lockdown now in its third month cooled activity for both sales and letting at the same time that many families were seeking more space to cope with working from home. That and a longstanding shortfall in the number of properties on the market is likely to squeeze prices higher, RICS said.
“More needs to be done to address the shortfall in supply with price and rent expectations very evidently continuing to accelerate,” said RICS Chief Economist Simon Rubinsohn.
Prices for home buyers also rose in February at about the same pace as the month before even during the lull in activity created by lockdown. About three quarters of the survey’s responses came before Chancellor of the Exchequer Rishi Sunak extended a tax break on property purchases, a move widely expected to boost prices in the coming months.
New buyer inquires and instructions to estate agents to put properties on the market both fell for a second month in February, although the decline was less severe than in January.
Here’s a roundup of comments made by agents in the RICS survey:
Chris Stonock -- Your Move lettings, Co Durham and Tyne and Wear in North England:
“Chronic shortage in supply. One of the worst months we have seen for new properties coming to the market. Tenants are staying put and too few new landlords attracted into the market. Increase in rents could well outpace house price inflation if trend continues.”
Simon Aldous -- Savills lettings in London:
“There is still an over supply of un-let properties due to changes in tenants’ preferences. It will take time to erode this excess supply before the rental market returns to growth next year.”
Mark Wood, Blues Property Ltd in Cambridge, East England:
“Viewings increased throughout February, although reluctance from viewers to commit, possibly waiting see if stamp duty holiday is extended.”
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