There are now more properties to rent than ever before and while this may be good news for tenants it has resulted in a drop in rents, says the Royal Institution of Chartered Surveyors in its Q3 lettings survey.
Supply is now at historic levels as frustrated vendors are placing their property on the market to let as they have been unable to agree sales due to a lack of demand in the housing market.
The influx of supply onto the market has forced downward pressure on rents. The net balance of surveyors reported rises or falls in rents fell from a positive 31% in the second quarter to a negative -12% in the third quarter, the lowest level in the survey's history.
London and the south east have been hardest hit with the net balance of surveyors reporting rises or falls in rents for London houses falling from a stable 0% in the second quarter to negative -53% in the third quarter. Flats fell from a positive 5% to a negative -33%.
The biggest turn around was in the south east, with the net balance of surveyors reporting rises or falls in rents for houses plummeting from 53% to -33%.
'The lettings sector has witnessed a boom in 2008 as sales in the housing market continued to slow. Many have been able to take advantage of rising rents to secure good returns,' said spokesman James Scott-Lee.
'However, the market place has become more and more competitive as many vendors have been forced to become amateur landlords, creating an inevitable downward pressure on rents where supply has matched demand,' he added.
The number of new landlords is causing concern across the sector. 'Many landlords have entered the lettings market in the last year without perhaps planning to do so and have taken this step out of necessity rather than desire. I would urge these amateur landlords to exercise caution and to research as much as possible as it is a position of no little responsibility,' said Ian Potter, operations manager of the Association of Residential Letting Agents.
'It is imperative that they seek out a regulated agent who is in a position to give them strong and independent advice, and who can protect funds that are being held on their behalf under client money protection schemes,' he added.
