New landlord instructions, which indicate supply, increased to 29 percent in the first quarter this year compared to -2 percent in the previous quarter.
RICS says a significant drop in demand in the housing market has pushed sellers back into the rental market. Demand for both family homes and flats increased as many would-be buyers found themselves unable to get onto the property ladder. RICS suggests rising yields may have stopped the recent retreat of landlords from the market.
It says: “Many are taking advantage of rising rental yields while they wait for the effect of the credit crunch to abate. Landlords are reaping the benefits of a collapse in demand in the housing market.”
Rents are still rising and rental expectations remain at more than double the survey’s long run average. Key areas enjoying rental growth are the South East and South West while London is the weakest area for rental growth, according to the institute.
RICS spokesperson James Scott-Lee says: “The sales market’s loss is the lettings market’s gain. Some would-be sellers are retreating from selling and letting or re-letting their properties as they wait for mortgage lenders to offer buyers more favourable lending criteria. While transaction numbers in the sales market are weak, many are taking advantage of rising rents and yields in the private lettings sector. With rental expectations high, landlords will continue to enjoy this increasingly lucrative market. Fears that a change in capital gains tax would bring a new wave of sellers have to date not been realised.”