Rising costs see property investors sell up
Britons are selling investment properties as mortgages become more expensive and rental yields fall.
New figures from the Royal Institution of Chartered Surveyors (Rics) show tenant demand has dropped and the number of buy-to-let properties coming onto the market is rising.
"House buyers are returning to the market to avoid rising borrowing costs, signalling a drop in demand for rental property," said Rics spokesman Jeremy Leaf.
"With more supply on the market due to a rush to avoid the upfront costs of home information packs, which now seems a little premature, buyers have found the market less tight than expected."
The new figures show there has been a 12 per cent fall in the number of estate agents reporting rise in lettings compared with October.
There has also been a rise in the number of landlords selling investment properties to 5.2 per cent - the highest level for two years.
Gross yields on investment property also fell for the third quarter in a row - dropping at their fastest pace since July 2004.
But while tenant demand is falling, rising mortgages mean buy-to-let property investors are upping rents to compensate for increased costs, with 29 per cent more surveyors reporting a rise rather than a fall in rents - just one percent below the record figure.
"Rising borrowing costs and a subsequent drop in yields have contributed to a worrying time for landlords," said Mr Leaf.
"Interest rate rises later in the year will have a further dampening effect, but the underlying strength of the economy and an active housing market should ensure a soft landing for many."
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