Frustrated UK Home-Sellers Opt To Let, Not Sell: Survey

Source : The Business Times, August 19, 2008

LONDON - Plummeting house sales and depleted mortgage markets have led to a surge in demand for rented housing in Britain, tempting many frustrated home sellers into renting, the Residential Lettings Survey from the Royal Institution of Chartered Surveyors (RICS) showed on Tuesday.

The survey showed agent instructions to let homes increased at the fastest pace in the survey's 10-year history last quarter, as sellers withdrew houses and flats from the sales market and placed them on the lettings market, pending improvement in buyer demand.

Forty-three per cent more chartered surveyors reported a rise than a fall in landlord instructions, compared to 30 per cent in the previous quarter, the report said.

Surveyors said prospective sellers were keen to exploit growing demand for rented homes as would-be-buyers remained in rented accommodation after finding their home-owning dreams thwarted by anaemic mortgage markets.

Thirty-seven per cent more chartered surveyors reported a rise than a fall in tenant lettings, up from 30 per cent in the last quarter, with demand for family homes remaining stronger than for flats.

Rents have continued to rise while house prices fall, driving gross rental income yields upwards and persuading landlords to hold onto their buy-to-let assets until house prices begin to rise again.

The proportion of landlords opting to sell at the expiry of a tenant lease fell to 2.1 per cent, the lowest level on record, and down from 4.2 per cent in the preceding quarter, which was the previous record.

'The lettings market is booming with many vendors opting to rent their property while sales in the housing market continue to dry up,' RICS spokesman James Scott-Lee said in a statement.

'Becoming a landlord is now an increasingly profitable option with rising rents and yields offering good returns.'

The RICS said established investors would continue to reap the benefits of Britain's housing downturn in the short term although it warned future increases in supply to the lettings market could have an impact on future rental growth as tenant options increase. -- REUTERS