Demand strong for rented properties

Last Modified: 09 Jun 2008
Source: PA News

Demand for rental properties remains at record levels as people delay plans to buy their own place due to the downturn in the housing market, research has showed.

The proportion of letting agents reporting demand for homes to rent outstripping supply remained at a historic high of 39% during the past three months.

The imbalance between supply and demand is highest in Greater London and the South East, according to the Association of Residential Letting Agents (ARLA).

But despite the high levels of demand, rents actually fell slightly during the three months to the end of May, with average rents for houses falling by 7%, while the level of income landlords can expect from flats dropped by 9%. The group attributed the fall to large numbers of new-build two-bedroom flats coming on to the rental market.

Average rents for a house now range from £3,000 a month in London to £931 outside of the South East, while tenants can expect to pay an average of £2,000 for a flat in London and £585 outside of the South East.

The survey's findings are contrary to recent reports that rents were booming on the back of the problems in the housing market.

Mortgage lender Paragon recently said strong demand had pushed the average cost of renting a home in England and Wales through the £1,000 a month barrier for the first time.

Ian Potter, head of operations at ARLA, said: "We are seeing corrections in individual locations throughout the country. The main cause of these is the developments of new blocks of two-bedroom flats coming on-stream.

"In many places this has had a positive effect as it has allowed the rental market to provide stability in housing at a time of volatility in the sales market. It also demolishes the myth of soaring rent levels."

But strong demand has led to a further fall in the average length of time a property is empty for between tenants, with this reducing from 24 days to 22 during the past three months. There has also been an increase in the average length of time tenants stay in a property for, with this rising from 16.1 months to 16.3 months.

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