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UK tenant demand fell for the primary time final month for the reason that early pandemic interval with property brokers forecasting the slowest tempo of lease rises in virtually 4 years, in an indication that pressures on squeezed households might be peaking.
Demand for rental properties declined to minus 2 in November, down from 17 in October and the primary detrimental studying since Could 2020, in accordance with a survey of property brokers by the Royal Establishment of Chartered Surveyors.
The index, printed by the skilled physique on Thursday, tracks the distinction between surveyors reporting an enlargement and a decline in tenant demand to supply a web steadiness.
Rics’ separate measure of rental worth expectations within the subsequent three months, a steadiness of brokers anticipating rises and falls, stood at 29 in November, down from 32 the earlier month and the bottom since January 2021.
Landlord directions, which point out properties being put up for lease, continued to fall at minus 13, however the studying was decrease than the minus 30 registered in October.
Jeremy Leaf, principal at London property company Jeremy Leaf & Co, mentioned: “Demand and lease ranges have eased in response to affordability considerations, notably for these properties the place the will increase had been beforehand the furthest and quickest.”
Surging rental costs have hit family funds exhausting over the previous two years as robust demand from households that might not afford to purchase a property clashed with a restricted inventory of dwellings.
Official information final month confirmed that common non-public rents rose 8.7 per cent within the 12 months to October, up from 8.4 per cent within the 12 months to September and simply shy of the report 9.2 per cent registered in March.
The slowdown in tenant demand reported by Rics got here as property brokers mentioned home costs continued to extend, even when gross sales remained broadly steady.
The online steadiness of the index monitoring home costs was 25, up from 16 in October, marking the fourth consecutive enhance and additional cementing the upward trajectory of home worth progress for the reason that summer season.
Some brokers attributed a gentle circulation of latest purchaser enquiries, for which the index was optimistic at 12, to the upcoming enhance in stamp obligation.
Chancellor Rachel Reeves’ determination to finish the short-term vacation on the property levy within the Funds means first-time consumers, for instance, will begin paying stamp obligation for properties price £300,000 or extra as an alternative of £425,000 from April 2025.
Stanley Shaw, of property company Mervyn Smith, mentioned: “There’s a mini bounce of consumers, particularly youthful first timers, trying to purchase earlier than the stamp will increase subsequent April, however it’s not a stampede.”
