Rental Values Down Friday, 27th February 2009

There has been a near doubling in the number of rental properties on the market. And this is driving down average rents.

The rise in rental properties was being driven by people who had been unable to sell their home and deciding to rent it instead.

The surge of rental homes coming on to the market was forcing rents down, as landlords had to compete for tenants. The average rent has come down by as much a £i50 per month.

With mortgage lending down the number of new rental properties coming onto the market rising dramatically since the beginning of the year, the decline in rental values that began in the second half of 2008 has accelerated and is likely to get worse as supply continues to outstrip demand.

This sudden surge in new rental properties is a result of the restricted availability of mortgages, the lack of buyer confidence and the dramatic slump in property sales in the second half of 2008. While tenant demand is still high, it is nowhere near high enough to keep up with the avalanche of new properties flooding the market.