New Tenants Fuel Demand for Rental Homes

Posted 2007-12-18

The downturn in the housing market is stimulating the demand for rental properties, according to the Royal Institution of Chartered Surveyors (RICS). Fewer renters are looking for flats, however. 

Incentives used to attract potential buyers have dried up, leading to an increase in tenant lettings.  Landlords are seeing benefits from current economic uncertainty. 

RICS reports that family houses are attracting more tenants than flats.  The most recent data shows that over 25 percent of surveyors report an increase rather than a drop in the demand for houses.  In contrast, only 19 percent report an increase in the demand for flats, down from nearly 40 percent in the last quarter. 

Tighter lending standards and increases in interest rates are having an impact on the buy-to-let market, according to RICS spokesman Jeremy Leaf, leading to some uncertainty for landlords. 

Nonetheless, Leaf believes that economic uncertainty and rising rents will benefit landlords.  At the same time, increasing rents will make it more difficult for potential home buyers to raise the necessary capital.  They will find it increasingly difficult to get into the housing market.

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