Property news from PWR Letting Agents Nottingham and Mansfield

• Growth in demand for rental property slows as does new landlord instructions
• Rents continue to decline but rental expectations suggest this trend is set to moderate
• The percentage of landlords planning to sell properties at the expiry of leases edges up slightly but remains at historically low levels

In the three months to April, tenant demand for rental property continued to increase, albeit at a slower pace. A net balance of 16% more surveyors reported a rise in new tenant lettings than a fall which compares with 42% in the previous three month period. Meanwhile, a net balance of 23% more surveyors reported a rise in new instructions.

The quantity of available property to let continues to weigh on rents. 55% more surveyors reported a fall in rents than a rise, which is the most negative reading in the survey’s history (1999). However, rental expectations,though still negative, have improved markedly. The net balance of –25% anticipating further rental declines compares with the previous reading of –41%. Significantly, surveyors are reporting that gross property yields are now falling for the first time since April 2007, indicating that rents are declining at a more rapid pace than house prices.

One interesting development in the latest survey is the increased willingness of landlords to consider selling their property at the expiry of a tenant lease. This has edged back up to 1.8% having fallen to just 0.2% in the three months to January. Even so, it remains a relatively low proportion; the long run average stands closer to 5% (the series began in October 2003).

From a sectoral perspective, tenant demand for houses increased at a faster pace than it did for flats, whilelandlord instructions increased at more or less the same pace. As a result, rents for houses fell at a slightly more gradual pace than for flats, while rental expectations for houses were also less negative.

In England and Wales, the London market was the weakest, with gross yields, rents and tenant demand falling faster than any other region in the survey. The Scottish market also appears relatively weak. By way of contrast, the North was the best performing region inthe survey, with rental falls relatively subdued, still firmtenant demand and rising gross yields.