Rents decline as “forced landlords” flood market

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by Gill Montia

Letting agents are forecasting a fall in UK rents, which could decline by as much as 10% by the end of the year.

Despite predictions that potential first-time buyers would buoy up the rental market until mortgage lending and confidence in the housing market recovers, the rental market is beginning to be flooded with properties that homemovers are unable or unwilling to sell during the downturn.

In addition, property developers, many of which have already mothballed new projects, are being forced to let new homes as sales have plummeted.

The rise in so called “forced landlords” is beginning to impact on rental income, providing unwelcome news for landlords already faced with a fall in property values and rising mortgage costs.

According to property agent Knight Frank, rents in the London area peaked in 2007 and will fall this year.

While the volume of tenants in the capital has risen by 25%, the volume of properties available for rent has risen by 35%.

Meanwhile, Savills has reported a 10% fall in rents in some areas. Docklands has been particularly hard hit with developers putting unsold properties on the lettings market.

The latest quarterly survey from the Association of Residential Letting Agents reported a 9% fall in rents for flats and a 7% fall for houses.