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Rental market splits with flats in greatest demand

In contrast, flat rental values were stable in December and increased 0.4% to £752pcm in January, showing mixed fortunes for the two property types. The overall average UK asking rent is now £804pcm, 2% lower than a month ago and 4.3% less than in January 2009.

The supply of houses available to rent rose by 3.2% while the number of flats fell by 0.3%. The supply of flats is now at one of the lowest levels since the end of 2008 which is contributing to the rise in rents. In addition, the shortage of flats on the market is outstripped by sustained demand, with 52% of renters searching the site in the first week of January looking for this property type.

The rise in rental values for flats can be attributed in part to greater demand from renters who are either financially constrained or are saving vigorously for a deposit on their next home. While there has been a slight easing of lending criteria, flats, the traditional entry level property, have only become slightly more affordable. First-time buyers still need to find £55,500 once they have secured their maximum mortgage, which represents 21 months’ gross first -time buyer income, hence the need to save.

While many renters are compromising on the type of home they take for budgetary reasons, they clearly still aspire to live in a house. Searches for houses rose 27.3% compared with 14.4% for flats.

The good news for landlords is that flats are offering better returns. The average gross rental yield for flats in January is 5.18% compared to 4.19% for houses.

FindaProperty.com’s Nigel Lewis said: "The flat rental market is showing signs of improvement at the moment driven by the greater number of people opting to live in flats during the recession which by default is a cheaper and therefore more popular choice than houses. This, coupled to the lower number of flats coming onto the market, is conspiring to ratchet up rents in the short term."

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0 thoughts on “Rental market splits with flats in greatest demand

  1. Major Landlord says:

    This is more statistical eyewash from Findaproperty:

    – what percentage of the agent-controlled rental market do they represent? By no means all . . .
    – asking rentals and agreed rentals are not the same thing, and they have no idea of what the REAL achieved rentals are . . .
    – I own ONLY houses, and ALL my rents have been increasing during the past 12 months
    – even if flat rents are rising, they need to in order to offset the much higher cost of operating flats due to high (and often excessive) maintenance charges
    – the yields of flats vs. houses may look better until you factor in the maintenance costs. Most flats cost a minimum of £1000 pa in charges, without anything more than minor running repairs, and with inflated extra costs for any real repair or maintenance work. A comparable house, even well maintained, will NEVER cost as much.
    – finally, as I always say of ANY stats in housing, what do averages mean? Answer: NOTHING. Even two “identical” neighbouring properties in the same street will sell or rent for different amounts, so how can you say that the average rent for houses is falling, if you can’t analyse the sample and ensure you are comparing like with like?

    When will Findaproperty stop pumping out this self-serving garbage, in a bid to look important and influential? Much of it is misleading, and some is even potentially damaging to the very people who pay to advertise with them. I suggest they shut up and get on with the work they are paid to do, and leave the figuring to those of us who actually know what we are talking about.