Rising rent risk for landlords

Nia Williams

March 30, 2010

The move comes in light of the recent RICS survey revealing that more letting agents expect rents to rise over the next three months.

According to the latest RICS residential lettings survey, which covers the three months to January 2010, more surveyors reported a rise in rents than a fall. This follows five consecutive quarters of negative readings.

The expectation for achievable rents also rose with 33% of respondents believing rents will rise over the coming quarter compared to just 22% last quarter.

Similarly FindaProperty’s Rental Index for March revealed rents have risen for the second consecutive month and are now £16 pcm higher than in January at £820 pcm. According to the survey the firming of rents has been underpinned by a reduction in the availability of rental properties on the market, which are now at the lowest level since October 2008.

Managing director of HomeLet John Boyle welcomed the increase in rents which he hopes will increase yields and encourage more people to enter the buy-to-let sector as well as help alleviate the widely anticipated shortage in rental properties.

However he says increases in rent asking prices could also cause problems for landlords further down the line.

“If rental prices continue to increase owing to the decline in supply of both flats and houses in the marketplace, people looking to rent may not be able to afford to do so or may struggle to make their monthly rental payments,” said Boyle.

“For that reason I’d advise landlords to make sure they know exactly who they’re letting their property to. Tenant referencing is a crucial area that is often neglected. Yet it can be the single most significant factor in protecting letting agents and landlords from tenants who can’t or won’t pay the rent.”

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