Letting yields fall again

Amanda Jarvis

March 6, 2002

The fall is blamed on a substantial increase in the number of investors entering the buy-to-let market in combination with static rents and a drop in demand.

The problem is most noticeable in the corporate lettings market in London, which accounts for 30 per cent of the market. This is thought to be due to the negative impact of 11 September and the continued poor performance of the financial markets. In contrast, regional demand was found to have held up much better, but this may be due to the fact that corporate lets only account for between six and 12 per cent of the overall market.

Other findings in the survey show that rents have remained static, possibly due to an increase in the supply of rental property, and RICS are predicting that in the next quarter rents are expected to rise fastest outside London.

Jeremy Leaf, lettings market spokesman for RICS, said: “There is not much profit for landlords in the lettings market at the moment. The increase in availability caused by investors entering the buy-to-let market has had a big impact on the whole sector in the last few months.

“Although tenant demand remains strong, especially for unfurnished property, the number of properties available has held rents down. However, that looks set to change in the coming months.”

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