Buy-to-let benefits from downturn in property sales

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by Lin Freestone

In its latest survey of residential lettings, the Royal Institution of Chartered Surveyors (Rics) indicates that the downturn in property sales is having a positive affect on buy-to-let.

The Institute’s survey of residential lettings in the three months to April 2008 shows the number of surveyors reporting a rise in instructions to let property rose by 29%. There was a fall of 3% in the previous three months.

Would-be sellers are withdrawing their properties from the market as they wait for mortgage lenders to offer buyers more favourable lending criteria, and instead are letting, or re-letting their properties.

Fewer landlords are leaving the rental marketplace. The sale of properties at the expiry of a tenant lease fell to 4.2%, from 4.6% in the previous quarter.

The Rics survey shows that 23% more UK surveyors reported a rise in gross yields, up from 5% in the previous quarter. Gross yields are now increasing at their fastest pace since the survey began reporting them in April 1999.

Rics has predicted that property sales could fall by 40% this year.