2008-11-18 12:22:09
A glut of unsold homes has flooded the rental market, driving down rents at the fastest rate on record.
The Royal Institution of Chartered Surveyors (Rics) said new instructions to sell flats and houses had been at record levels in the past few months.
However, Rics said many people who cannot sell their homes have decided to let their properties, and this increase in supply has pushed rents down.
The proportion of surveyors reporting lower rents was its highest since 2003.
Quick change
The past year has seen a dramatic turnaround in the UK property market because of the international banking crisis and the credit crunch.
Frustrated vendors are placing their property on the market to let
Royal Institution of Chartered Surveyors
The latest quarterly Rics survey - for August, September and October - shows that the difficulties people have had in buying and selling homes have spilled over decisively into the rental market.
With the supply of mortgages, sales and house prices all falling fast, many would-be vendors have decided to let their homes instead of selling them.
"Frustrated vendors are placing their property on the market to let as they have been unable to agree sales due to a lack of demand in the housing market," said Rics.
The turnaround for potential landlords and tenants has been swift and the number of homes available to rent has boomed.
The proportion of Rics members who, looking back over the previous three months, reported more instructions to sell properties then fewer instructions, was 68% for houses and 50% for flats.
As a result, the number of surveyors who said rents were now falling outstripped by 12% those who said they were still rising, the first fall in rents since 2003.
This was a big change from the previous Rics report in August which had shown that 31% more surveyors were reporting that rents were still rising.
London and South East
The region most affected by the sudden change in the rental market has been London and the South East.
That part of the country is heavily dependent on the financial services industry and has seen a swift rise in unemployment.
Unlike the rest of the country it has also seen a slump in demand from potential tenants.
"Tenant demand growth in the South East came to a virtual halt, while in London, demand actually contracted outright," said Rics.
The effect was to drive down rental levels, with 53% more Rics members in London reporting a fall in rents for houses than a rise, and 33% more reporting a drop in rents for flats.