Rents fall further but trend is slowing

Rents across the residential lettings sector fell further in the first quarter of 2009, but the trend is set to moderate, according to the latest RICS Lettings Survey published today.

The net balance of Chartered Surveyors reporting a fall in rents moved from 48% to 55%, while in Scotland 80% reported a fall and in London this figure stands at 85%. The figures are good news for tenants but bad news for landlords. The report shows that gross property yields are now falling for the first time since April 2007, indicating that rents are declining at a more rapid pace than house prices.

In the future, it looks like things are set to improve for landlords. Rental expectations among surveyors are shown to have improved, with the balance of surveyors anticipating future rental declines moving from 41% to 25%. But for tenants hoping to sit tight, one figure may ring alarms bells. The figures reveal an increased willingness among landlords to consider selling their property at the expiry of a tenant lease. This has edged back up to 1.8% having fallen to just 0.2% in the three months to January.

RICS spokesperson Jeremy Leaf commented:

“Property transactions are starting to rise from very low levels and the influx of supply in the rental market has slowed as vendors begin to find buyers. Demand for rental property is still high but tenants have been able to take advantage of a flooded market to negotiate lower deals. Even so, the downward pressure on rents should ease in the coming months providing some good news for landlords.”