The latest lettings and sales market snapshot from the Royal Institution of Chartered Surveyors has prompted a warning from a leading business analyst.
Today’s RICS report says that yet again, its surveyor members saw more tenants and fewer landlords in May, as higher interest rates persuaded more buy to let landlords to sell up.
Sarah Coles, an analyst at business consultancy Hargreaves Lansdown, says: “Reports from the agents read as increasingly desperate cries for help, as the imbalance in the market gets worse with each passing month.
“Landlords have been selling after concluding new legislation was too expensive to comply with, and they’ve now been joined by a swathe of buy to let lenders, who realise that, once they remortgage, higher rates mean the maths no longer adds up.
“Two thirds of agents say more buy to let landlords are trying to sell. At the same time, more would-be-first-time-buyers are likely to sit things out for a while, to see what happens next to prices and mortgage rates.
“They may well be joined by owners who decide to sell and rent for a while. This is likely to lead to a surge in demand, and make it even more difficult to find an affordable rental property.
“Rents are rising rapidly, and RICS expects these increases to average six per cent in the coming years. Given that rent absorbs a far bigger chunk of people’s incomes than mortgages, these hikes will add insult to injury. It’s going to make it even more difficult for renters to stay on top of their finances, let alone to get a property deposit together.”
The sales market in May had challenges too but was less dire, says RICS.
Buyer demand, house prices and agreed sales fell again – although not as badly as previously.
New instructions were up for the first time since early 2022. The average agent has 38 properties on their books, close to the long-term average of 40.
Coles says: “May was the calm before the storm, and even that was pretty dreary – with demand, house prices and sales falling.
“Mortgage rate hikes in the past two weeks will pile on more misery for the property market in the months to come, depressing demand and stifling sales. But it’s not just sellers who face a wretched summer, rising rates will also bring more grief for renters too.
“… Buyers were stymied by a toxic combination of runaway inflation and higher house prices, and they were concerned about what might lie ahead.”
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