Families forced to let homes they cannot sell
The seizure in the housing market is forcing families who cannot sell their properties to let them and move to rented accommodation, a new survey suggests.
Rental demand has soared to a ten-year high in the past three months and the number of properties to let has also hit record levels, figures from the Royal Institution of Chartered Surveyors (RICS) show. The balance of surveyors reporting a rise in business from new landlords soared to a record high of 43 per cent in the three months to the end of July, up from 30 per cent in the three months to the end of April, RICS said.
At the same time, some 37 per cent more surveyors said that tenant demand had risen rather than fallen in the three months to the end of July, up from 30 per cent in the previous quarter and the highest proportion since the RICS survey began in 1998. David Richardson of Arnolds, a chartered surveyor in Norwich, said: "People are letting their own house and then renting something more suitable to their current needs."
The housing market has virtually ground to a halt in the wake of the credit crunch, with lenders becoming more circumspect about lending to would-be buyers. Home sellers are being forced to cut prices and in some cases they still cannot secure a sale. About £22,000 has been wiped off the value of an average home since the market turned in August last year. Many economists predict that prices will continue to fall next year and even into 2010, prompting many households that have already sold to move into rental accomodation rather than buying a new home while they wait for the market to bottom out.
Andrew Cummings, of Chancellors, in Stanmore, said: "Many households have sold their family homes and move into rental acommodation for six to twelve months in order to reassess the market before buying."
Family homes were more sought after than flats, RICS said, with 43 per cent more surveyors reporting a rise in demand for houses compared with 34 per cent for flats.
But the rate at which tenants are seeking property is being outstripped by the number of rental properties coming on to the market, leading some to speculate that rents, which have been rising, may flatten out. Nearly a quarter more surveyors said they expected rents to rise rather than fall in the coming months, down from 29 per cent in the previous quarter.
Christine Burnett, of Countrywide Residential Lettings in Ashford, Kent, said that rents were already falling. "Rents have dropped due to the number of properties that, being unable to be sold, are now becoming available to rent," she said.
James Scott-Lee, of RICS, said that becoming a landlord was a profitable option but added: "Ever-increasing supply could have an impact on rental growth as tenant options increase."