U.K. Rents Fall for First Time Since 2003 as Home Prices Fall
By Simon Packard
Nov. 18 (Bloomberg) — Rents for U.K. homes fell for the first time in five-and-a-half years as the worst housing slump since the 1990s caused a record increase in properties put on the rental market, the Royal Institution of Chartered Surveyors said.
Real estate brokers reporting that rents on their properties fell outnumbered those who said they rose by 12 points in the three months ended Oct. 31. Those reporting an increase in the number of rental listings was 56 percentage points higher than those reporting a drop, according to the survey released today by the London-based professional organization.
U.K. home prices fell an annual 14.6 percent in October, the biggest decline since the 1991 recession, according to mortgage- lender Nationwide Building Society. The 12-month slide and the seizure of the mortgage market deterred buyers, forcing them into rental accommodation. More homeowners became landlords because they didn’t want to sell at distressed prices, RICS said.
“There seems to be an oversupply of rental properties and a lack of confidence from prospective tenants,” said Beverley Morgan, managing director of the brokerage that bears his name in Cwmbran, Wales. The Welsh market registered one of the two biggest pick-ups in new landlord instructions across the U.K., according to the RICS survey.
“In some cases, landlords are prepared to take less than the asking price,” to rent their property, Morgan said. His comments accompanied the RICS survey release, which reported that the falls in rents across the country were “quite modest” and less than the fall in property values.
Lower rental income may also hurt investors who took advantage of low borrowing costs and rising home prices to buy rental properties. These private landlords, who mostly financed their investments with “buy-to-let” mortgages, own more than 1 million rental homes across the U.K. more