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12th December 2011

Rental Yields up for Seventh Consecutive Quarter, says RICS

Continued high demand for rental properties means that landlords are enjoying ever rising rental yields, a new survey suggests.

 

According to the latest Residential Lettings Survey from the Royal Institution of Chartered Surveyors (RICS), investment property London could prove to be particularly lucrative due to rapid increases in rental yields.

 

Across the UK, 15 per cent more chartered surveyors reported rental yields rose rather than fell in the third quarter of the year - the seventh consecutive quarter that yields have increased.

 

In addition, 19 per cent more surveyors reported rents rose rather than fell albeit at a slower pace than earlier in the year.

 

But rents in London increased at a faster rate than any other region in the UK in the three months to October.

Surveyors reported that rising demand among tenants was the reason for an increase in rents.

 

A lack of mortgage finance continues to be the main reason for the large numbers turning to the rental market, but fears over the economy are also playing a part, with renting seen as a safer option than purchasing a property in the current turbulent economic climate, said RICS.

 

"The disappointing economic message communicated by the chancellor in his Autumn Statement and the prospect of further job losses in some sectors and areas over those previously envisaged is likely to continue to underpin the residential lettings market in the near term," said RICS spokesperson James Scott-Lee.

 

"Indeed, despite a measure of resistance to rising rent levels from tenants, in some parts of the country the imbalance between demand and supply for rented property suggests that for the foreseeable future landlords will have a good if not increasing return on their investments in comparison with other main stream options."

 

Although the supply of rental properties coming on to the market is failing to keep up with demand, RICS found that there was a rise in buy-to-let property investment during the quarter, with new landlord instructions increasing at their fastest pace since April 2009.