Rents forced down by glut of homes

Kate Hughes
Monday 17 November 2008 20:00 EST
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A flood of unsellable homes has forced down rental prices as homeowners instead turn to renting their properties, according to the Royal Institute of Chartered Surveyors (Rics).

The number of housing transactions is at the lowest level since records began as banks limit the availability of finance to buyers. Some 50 per cent more surveyors reported an increase rather than a decrease in the number of flats to let in the third quarter of 2008, rising to 68 per cent for houses.

Rent prices in London and the Southeast were the worst hit, with the net balance of surveyors reporting rises or falls in rents for London houses falling from a stable zero per cent in the second quarter to minus 53 per cent in the third quarter, while flats fell from a positive 5 per cent to minus 33 per cent.

James Scott-Lee, a Rics spokesperson, said: "The lettings sector has witnessed a boom in 2008 as sales in the housing market continued to slow, Many have been able to take advantage of rising rents to secure good returns. However, the market has become more and more competitive as many vendors have been forced to become amateur landlords, creating an inevitable downward pressure on rents where supply has matched demand."

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