Page last updated at 00:00 GMT, Thursday, 26 February 2009

'Rents down' amid flooded market

Letting boards
Excess supply of rental property is a factor across the UK, the reports say

The cost of renting a home has dropped as frustrated property sellers have been flooding the market, according to two separate surveys.

Owners were choosing to let rather than sell, having accepted that property prices were likely to stay low for some time, said property website Globrix.

Cities such as Manchester continue to have an oversupply of new-build apartments, said Findaproperty.com.

Its research chief said landlords were adding perks to attract tenants.

Extras such as satellite television or cleaners were being included in the rental agreement to make properties more appealing, said Andrew Smith, of Findaproperty.com.

Supply surge

Both surveys, drawing on listings placed by estate agents on the websites, suggest that the tough economic climate has caused a surge in supply of rental properties - even since the turn of the year.

AVERAGE ASKING RENT
Scotland: 683, down 2.3% year-on-year
North East England: 625, up 10.6%
North West England: 592, down 14.3%
Yorkshire and the Humber: 595, down 2.3%
West Midlands: 643, down 4.9%
East Midlands: 633, up 2.4%
Wales: 651, down 2.3%
East England: 787, down 4%
London: 1,669, down 5.9%
South West England: 815, down 2.4%
South East England: 1,066, down 6.1%
Source: FindaProperty Rental Index, February 2009

Average rental asking prices dropped by 4.8% over the year to 830 a month in February, according to Findaproperty.com.

It found that the average home was up for grabs for 70 days before tenants were found, 15 days longer than a year ago.

"Tenants are becoming more demanding as the market swings in their favour and landlords are now less likely to receive the uplift in rents at renewal that they might previously have achieved," said Mr Smith.

"Despite falling rents and increased competition, we do not expect investors to abandon the market."

He suggested that the rush to build new flats, designed primarily during the property boom for buy-to-let investors, was the most significant reason behind the 14.3% fall in rental prices in the North West in the last year.

This was particularly obvious in Manchester, said Mr Smith.

Most other regions of the country saw a fall in asking rents in the last year of between 2.3% and 6.1%, with the exception of price rises in the East Midlands and the North East.

Local issues

The Globrix report found that the growing supply of properties available to rent had accelerated since the start of 2009. Although the report described the rental market as at saturation point, chief executive Daniel Lee said that supply would continue to outstrip demand.

"Many homeowners, worried about losing their jobs and struggling with debts accrued during the good years, are renting their properties and downsizing or moving to less expensive areas to hedge their bets," he said.

But the situation could be different at a local level, according to Zaza Patterson, lettings manager at Dreweatt Neate estate agents.

"The rental market is a localised beast and it's important to understand that in some areas rents will have fallen by less, by more or even not at all," she said.

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