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Property rents in UK set to fall in 2010 as supply drops off, survey shows

The recent pick up in the property market seems to have led to drop off in the number of rental properties, particularly houses, being made available and as a result surveyor optimism has increased for the first time since July 2008.

Some 22% more surveyors expect rents to rise rather than fall in the next three months, says the latest RICS Lettings Survey.
The drop off in supply is the main driver for the more positive sentiment, with new instructions reaching their lowest level since the survey began in 1998.
A net balance of 11% of surveyors are seeing the number of new instructions coming onto the market falling rather than rising.
This is in stark contrast to levels seen late last year when the housing market was still suffering from falling prices and many would-be sellers were turning to the lettings market when their houses failed to sell, RICS says.

Only 4% of chartered surveyors are still reporting falling rather than rising rents, indicating that the downward pressure on rents is already starting to ease.
Significantly London and the North are already seeing the majority of surveyors reporting price rises over the past three months.

Demand for rental property is still rising as 16% more surveyors saw activity pick up over the past three months with demand for houses particularly strong particularly in London.

‘It seems the current upward trend in the housing market is having a significant effect on the lettings market with many of the accidental landlords returning to the sales market to take advantage of the recent price increases,’ said RICS spokesman Jeremy Leaf.

‘As a result the recent oversupply is reversing with new instructions at the lowest levels we have ever seen.
This of course is impacting on prices and tenants no longer have as strong a bargaining power as they did,’ he added.

The report’s findings are echoed by a survey from Rightmove, the UK’s number one property website for lettings, that shows over a third of people who will rent a property over the next 12 months expect prices in the rental market to increase. Just 7% think that prices will fall.