Landlords see rental yields rise

by Sarah Ashcroft

Increasing demand for tenancy agreements are causing rental yields for landlords to soar. This is the view of the Royal Institution of Chartered Surveyors (Rics), which reveals chartered surveyors are reporting favourable conditions in the private rented sector.

The Rics Residential Lettings Survey found 15 per cent more chartered surveyors reported rental yields rose rather than fell in the three months to October. The seventh consecutive quarter of rising yields, it is thought the trend is down to demand tenant outstripping property supply.

Meanwhile, 19 per cent more surveyors say rents are increasing rather than falling, though the pace of growth has levelled off from earlier in the year.

"Supply of rental property to the market remains unable to keep up with tenant demand, but new landlord instructions did increase in the three month period to October, rising to a net balance of +10 per cent," says Rics.

Surveyors have also reported to Rics that some properties, particularly family homes, are coming to the lettings market because they cannot find buyers.

Rics spokesperson James Scott-Lee commented: "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."

Savills predicts residential rental growth of 20.5 per cent over the next five years across the UK. It also forecasts the number of private rented sector households in the UK rising by one million between 2009/10 and 2015/16.

Rics adds: "Perhaps unsurprisingly, after experiencing rising rental yields, fewer landlords are opting to sell at the end of a tenancy agreement." It reports that the percentage planning to do so is just 2.6 per cent, further contributing to low levels of supply.

  • Landlord and Tenancy News from Lawpack: Solicitor-approved Rent Increase Notice (Section 13) with expert guidance on how to complete the legal form

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Published on: December 7, 2011

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Rent Increase Notice - Section 13 Notice

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Solicitor-approved rent increase notice for landlords to raise rent. Also known as a Section 13 Notice.

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