Rents 'set to increase' due to shortage of new homes - RICS

Rents look set to increase during the months ahead after the number of homes available to let fell for the second quarter in a row, research showed today.

A third more surveyors expect the cost of renting a property to rise in the coming three months than those who think it will fall, according to the Royal Institution of Chartered Surveyors.

Their expectations are being driven by a continued decline in the supply of flats and houses available to let, as homeowners who were forced to rent out their properties after being unable to sell them, are putting them back on the market again.

The trend led to 23% more chartered surveyors reporting a fall rather than a rise in new landlord instructions in the three months to the end of January, up from 18% more who saw a drop during the previous quarter.

At the same time, the balance of surveyors reporting a rise in rents in the period clawed its way up to zero, following five quarters during which it had been negative, with more surveyors reporting falling rents than those who saw rises.

Demand for rented homes remained strong, with 16% more surveyors seeing a rise in people who wanted to rent a home than those who saw a fall.

The group said would-be first-time buyers who were unable to get on to the property ladder continued to drive the increase in demand for good rental properties.

RICS spokesman Jeremy Leaf said: "It is becoming clear that movements in the housing market are affecting lettings.

"The RICS housing survey has seen a steady increase in the number of new instructions coming on to the market over the past few months, whilst simultaneously we see with this survey that the number of properties available to rent has decreased.

"This is a clear sign that the accidental landlords are returning to the sales market.

"If demand remains strong, which it is likely to as many first-time buyers are still finding themselves priced out of the housing market, then rents should continue to rise as would-be tenants compete for fewer properties."

The number of new properties available to rent fell across all regions of Great Britain in the three months, with the South East seeing the biggest fall.

Rents also increased in the South East and London, although they fell across most of the rest of the country.