Member Article

North East rents increase significantly

Rents in the North East rose significantly in the first quarter of 2011, as tenant demand continued to exceed new instructions.

According to the latest RICS Residential Lettings Survey, 11% more chartered surveyors in the region saw a rise in rents rather than a fall. This was largely driven by consistently high demand as a net balance of 20% more respondents reported rises in prospective tenants.

Rent values across the UK have increased consistently since 2009, as the problem of unaffordable mortgage rates and large deposits continued to be a barrier to homeownership.

Supply of property in the region also continued to rise, albeit at a slower pace. 8% more surveyors reported increases rather than decreases in landlords looking to let their properties, in comparison to 21% in the previous period.

Peter Bolton King, RICS Global Residential Director, commented:“The rental market in the North East is still fairly buoyant and this looks likely to continue, given the challenges facing the sales market. Indeed, mortgage finance may become even harder to access particularly for first-time buyers if the euro crisis continues to deepen.

“This points to tenant demand continuing to outpace supply. As a result, rents across the region will remain on an upward trajectory, adding to the pressure on many households whose incomes are already being squeezed.”

Rental values have also increased in the region, and while landlords’ gross yields also rose the pace has started to slow. This was the same as in every part of the UK with the exception of London, which saw a slight downturn.

Many North East surveyors feel that the market will remain bouyant over the next quarter, with 8% predicting a rise rather than a fall. All areas of the UK expect rents to increase with the exception of Scotland.

Carly Smith of Bridgfords Countrywide in Darlington, County Durham added: “Landlords are saying they want to ‘test the market’ and try and sell their property when the current tenant vacates. They seem to think the market has improved and a valid sale is possible.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .