Rents are falling

The Royal Institution of Chartered Surveyors (RICS) said that the rental market remained strong during the three months to the end of January as, in the hope that prices would fall, people put off plans to buy a home.

In some parts of London and the South East, worries over a potential house price crash have prompted some homeowners to sell up and rent.

However, despite rising demand for rental properties, rents fell for the fourth quarter in a row, the institution said.

About 9% more surveyors reported a drop in rents than those who reported a rise, compared with 6% in the previous quarter.

Market saturated

Falls were most noticeable in London and the South East, where last year's buy-to-let boom has led to the market becoming saturated.

Rents elsewhere held up better, with slight rises in the North and the West Midlands.

As for the future, a net 14% surveyors predicted that rents would rise across the UK, and that in London and the South East rents would stop falling as tenant demand continued to strengthen.

The number of properties on surveyors books rose slightly during the three months, with 7% more surveyors reporting a rise, although this was down from 32% the previous quarter.

"There has been renewed tenant interest in smaller properties in particular, as would-be buyers are renting temporarily, waiting to see if sales prices fall," said Jeremy Leaf RICS residential lettings spokesman.

"Many homeowners are also selling up and renting, hoping to make a profit from buying in a declining market."