Rental demand 'booming' as sales stagnate

A new report from the Royal Institution of Chartered Surveyors (Rics) has revealed that landlords are reporting a stagnation in home sales, but a rise in rental demand.

The most recent Rics lettings survey showed that 20 per cent more of its landlord members reported a rise than a fall in rental demand for the third quarter, with family homes prompting the highest levels of interest.

With an oversupply of new-build properties said to be dampening rent increases being for flats, demand and rental yields were still high on all London property types – with both families and young professionals delaying house purchase in current conditions.

A spokesman for Rics said: "Many landlords will still take solace from uncertainty in the economy and enjoy the gains from rising rents.

"A combination of the tightening lending criteria and successive interest rate rises has started to hit the buy-to-let market but, with the drop in capital gains tax due in April next year, many landlords will resist selling until the spring."

Despite considerable rises in rental demand and yields, the third quarter performance was not quite as buoyant as the surge in buy-to-let rental income seen in the second quarter of 2007.

News posted on 18th December, 2007