Buy-to-let properties flooding on to the lettings market have pushed rents down for the first time in over two years, says RICS in its latest survey of the UK lettings market, published today (30 May).
Rental levels have fallen steadily since their peak in October 2000 which, combined with the current rises in property prices, have pushed down gross yields for landlords for the sixth consecutive quarter.
Activity in the market remained unchanged from the last quarter, with the difference between those surveyors reporting a rise in demand against those reporting a fall at 12%, down from the 31% for the same period last year.
Private landlords dominate, with 86% of the market, institutional landlords account for 10% and the remainder such as developers have 4%. The share of tenant mix hanged over the three month period. Social lets showed the biggest change with a rise of 6%, up from 3%. Private tenants rose to 83% from 82%. Corporate lets were down to 9% from 12%. Students and others remained unchanged at 3%.
For the next quarter, only 8% of surveyors expect rents to rise, confirming the depressed nature of the market. Gross yields are also expected to stay under pressure as residential property prices continue to rise.
RICS lettings market spokesman, Jeremy Leaf, said:
â€˜The lettings market is saturated with properties as a result of the rush to invest in buy- to-let properties. There are too many landlords chasing too few tenants at the moment, driving rents down to a level where making a profit is difficult.
â€˜There will be many investors who are disappointed that buy-to-let has not lived up to their expectations. We would advise anyone considering entering the buy-to-let market at the moment to take professional advice before going any further, or even delay until market conditions improve.â€™