Leases-Leasing
Tenant Demand Pushes Rent To Highest In Almost Five Years
Rent rises accelerated for the second consecutive quarter driven by a combination of economic and demographic factors says RICS, in its recent quarterly lettings survey for February-April. RICS say that 20 percent more chartered surveyors report a rise in rental levels, with rents climbing at their fastest pace since July 2001. Economic growth, rising employment and inward migration from the EU has increased upward pressure on rents. Surveyors are also confident the upward trend will be sustained into the next quarter of 2006.
The survey shows that instructions to let property continued to grow at a steady pace but have been outstripped by tenant demand for the eighth consecutive quarter. Tenant demand in London accelerated to twice the long run average with rising rents pushed by increases in migrant labour amongst other factors.
Investors are holding on tight to their existing properties. The proportion of those selling property where tenancies have expired dropped to 3.8% in the quarter to April, the lowest outcome in two and a half years. RICS spokesperson Jeremy Lead commented "Investors are holding fast to property as healthy house prices and strong tenant demand hearten expectations of capital growth. The news is not so good for first time buyers with house prices continuing to rise and the alternative of renting steadily becoming more expensive. Economic prosperity and population migration have increased rental demand making conditions better for property investors. The recent choppy ride for equities means interest rates are less likely to rise which is good news for investment."
RICS say that the average rent in the country was ?778 per calendar month in January 2006. Rent for a one bedroom flat in Britain was ?589 pcm, a two bedroom flat ?727 pcm, a three bedroom semi detached house ?925 pcm and for a four bedroom detached house ?1245. Excluding London, the average rent was ?564 pcm. The highest rents are paid in London and the south east (?1763 and ?779 respectively). The next highest are eastern and south west, both at ?586. Wales and Scotland have the lowest rents at ?394 and ?420. In England the lowest rents are in the east midlands at ?448.
Gross yields remained virtually unchanged for the second consecutive quarter, rising only slightly.
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Rewrote by Daniel Soar
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