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And the winner is...renting

A recent Royal Institution of Chartered Surveyors (RICS) survey revealed that the number of properties up for rent has increased as people who cannot sell their homes opt to let them out instead.

The RICS survey indicates that the slump in the property market is forcing more people to either become landlords or tenants. IN July, RICS members saw new instructions from landlords rise at there fastest rate on record.

However, though housing prices are falling, there is no correlation in rent process. The demand for properties to rent outweighs the number available. This has had the knock on effect of pushing rent prices up in many areas of the UK.

In fact, many would be buyers are being forces to enter the rental market mainly because of the lack of affordable finance products available on the market. This has seen the number of mortgage approvals drop by 70%, which in turn has seen the number of house sales over the past year drop by 50%.

With the “renting” trend showing no signs of slowing down landlords are now more inclined to keep hold of their rental properties. The RICS survey found that only 2.1% opted to sell when their tenants’ leases expired.

So is there any good news for you would be buyers – turned renters! Well the answer in theory is yes. The more properties which are taken of the sales market and offered up for rent should see the balance between the demand and supply for rental properties become more equal. This means that rental prices should perhaps become more negotiable.

Author: Andrew Flint

Date: August 2008