It reports that tenant demand has held broadly steady through the winter, but the supply of available homes remains constrained. Landlord instructions continue to fall, leaving agents with too few properties to meet demand.
With supply still tightening, 20% of survey respondents anticipate further rent increases in the coming quarter.
The RICS snapshot is a sentiment survey, and participating agents remain notably pessimistic about the outlook for the private rented sector, particularly in light of the Renters’ Rights Act, which many believe is accelerating landlord retreat.
Some of the feedback from agents:
A Skegness agency comments: “As the Great British Sell Off by Landlords continues, Tenant demand is of course still increasing, as are rents. However, a growing number of applicants are struggling to satisfy credit reference checks etc, so we expect Landlord rent insurance take-up to increase, at greater cost to tenants.”
A Tenbury Wells agency says: “Many landlords still leaving BTL sector and rents rising given shrinking supply. This appears not to have been properly considered when imposing the new legislation. Over regulation is a deterrent to all, not just those “bad apples”. Shrinking stock =higher rents.”
A north London agency, believes: “Now that the Renters’ Rights Act is almost upon us many landlords are trying to sell when tenancies end or come up for renewal. This has resulted in lack of choice, thus keeping rents at a higher level than might have been expected due to continuing cost of living concerns.”
And another London agency says: “Landlords are continuing to leave the rental sector and selling up when tenancies end. Egregious government measures against the PRS, the Renters Rights Act and lack of capital appreciation in recent years provide little incentive to retain a rental investment in parts of London.”
There is a terse comment from a Southport Surveyors company: “Recent government policies are expected to contribute to increased rents in the marketplace.”
Confidence in the sales market has taken a fresh hit, with the latest RICS agents’ report indicating that the Iran conflict is already feeding through into sentiment.
Although some surveyors noted a more upbeat start to the year, overall confidence weakened as concerns around inflation, interest rates and global instability intensified.
Buyer demand slipped again in February, with the headline net balance for new enquiries falling to –26%, down from –15% in January.
Agreed sales also remained muted, recording a net balance of –12%, while near-term sales expectations softened to –2%, signalling little prospect of an immediate rebound.
Even with the near-term slowdown, the longer-range picture looks firmer. A net balance of +17% of RICS respondents still expect sales activity to increase over the next 12 months, signalling that agents anticipate a gradual recovery once current pressures ease.
House prices were broadly unchanged in February, with the national price balance coming in at –12%, only a touch weaker than the previous month. This suggests that, despite softer demand, pricing remains relatively stable for now.