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UK tenant demand fell for the first time last month since the early pandemic period with estate agents forecasting the slowest pace of rent rises in almost four years, in a sign that pressures on squeezed households could be peaking.
Demand for rental properties declined to minus 2 in November, down from 17 in October and the first negative reading since May 2020, according to a survey of estate agents by the Royal Institution of Chartered Surveyors.
The index, published by the professional body on Thursday, tracks the difference between surveyors reporting an expansion and a decline in tenant demand to produce a net balance.
Rics’ separate measure of rental price expectations in the next three months, a balance of agents expecting rises and falls, stood at 29 in November, down from 32 the previous month and the lowest since January 2021.
Landlord instructions, which indicate properties being put up for rent, continued to fall at minus 13, but the reading was lower than the minus 30 registered in October.
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Jeremy Leaf, principal at London estate agency Jeremy Leaf & Co, said: “Demand and rent levels have eased in response to affordability concerns, particularly for those properties where the increases were previously the furthest and fastest.”
Surging rental prices have hit household finances hard over the past two years as strong demand from households that could not afford to buy a property clashed with a limited stock of dwellings.
Official data last month showed that average private rents rose 8.7 per cent in the 12 months to October, up from 8.4 per cent in the year to September and just shy of the record 9.2 per cent registered in March.
The slowdown in tenant demand reported by Rics came as estate agents said house prices continued to increase, even if sales remained broadly stable.
The net balance of the index tracking house prices was 25, up from 16 in October, marking the fourth consecutive increase and further cementing the upward trajectory of house price growth since the summer.
Some agents attributed a steady flow of new buyer enquiries, for which the index was positive at 12, to the upcoming increase in stamp duty.
Chancellor Rachel Reeves’ decision to end the temporary holiday on the property levy in the Budget means first-time buyers, for example, will start paying stamp duty for properties worth £300,000 or more instead of £425,000 from April 2025.
Stanley Shaw, of estate agency Mervyn Smith, said: “There is a mini bounce of buyers, especially younger first timers, looking to buy before the stamp increases next April, but it’s not a stampede.”
