The lettings market remains buoyant in the South West with increased tenant demand and strong rents reported in the latest RICS Residential Lettings Survey.

44 per cent more chartered surveyors reported a rise in demand for property rather than a fall within the South West, compared to 26 per cent nationally. Tenant demand increased across most UK regions, but was strongest in London and the East of England. Continued difficulty in securing mortgage finance, worries over a double dip in housing and large deposits required by lenders are leading to higher numbers continuing to seek to rent rather than buy.

As a result, rents increased for the second consecutive quarter across the UK, with 27 per cent more surveyors reporting a rise in rents than a fall. Here in the South West 26 per cent more reported a rise, which was down slightly on the previous quarter (28 per cent) but shows continuing strong rents in the region. Just a year ago the picture was very different, as over supply pushed rents down and 29 per cent more surveyors nationally reported falling not rising rents.

Although interest rates are at a record low – making property a potentially attractive option for investors – difficulty in securing buy-to-let mortgages is contributing to the lack of supply. New supply of rentable property remains slow across much of the UK. However here in the South West activity increased with the net balance of surveyors reporting a rise rather than a fall in instructions up to 25 per cent from 11 per cent the previous quarter.

Existing landlords do not appear to be in any rush to dispose of their property; a net balance of just one per cent in the South West said they intended to sell their properties at the end of a tenancy agreement.Looking ahead, the outlook for rents remains positive. 38 per cent more surveyors expect rents to increase in the South West over the next quarter rather than fall, compared to 33 percent across the UK. Rents for houses are expected to marginally outperform flats, with the net balances for this forward looking indicator moving to +55 and +45 respectively in the region.

Will Gentle, manager of Burns Lettings commented:

The last three months have seen a significant improvement in the value of rents across the board with the number of new properties to let becoming available within Bournemouth at a low. We are seeing the sales market still suffer while the demand for quality rental property increases due to the ever increasing numbers of prospective tenants.

Existing landlords keen to expand their portfolio may still be struggling to access the necessary finance despite improved market conditions.