Rental demand up 33%

Demand for rental property outside of London rose 33 per cent in the first quarter of 2008.

That is according to research from letting agent Hamptons International, which finds, although supply has remained stable, demand has continued to increase.

A greater number of tenants are choosing to renew their tenancies, while a sharp rise in new applicants has compounded the need for additional stock, finds the organisation.

More than three quarters of Hamptons’ tenancies are now extending beyond their initial term and with confidence in the sales market reduced, the demand for rental property is continuing to rise.

The latest survey from the Royal Institution of Chartered Surveyors finds confidence in the property market is now at an all time low.

In addition, with increases in mortgage interest rates and consequently landlords’ overheads, many short-term property investors are looking to exit the buy-to-let market, providing opportunities for professional investors at more realistic prices.

This, however, conflicts with Rics research, which finds landlords are not seeking to exit from the market and conditions deteriorate.

"Rental properties are achieving their asking price and, in some cases, we have seen properties go to 'best bids' in hot spot locations," said Catherine Manning, regional lettings director, Hamptons International.

"For savvy investors looking to purchase buy-to-let property outside of London, it is worth noting that the strongest yields generally come from smaller units – such as one-bed and two-bed properties.

"For those looking to acquire new assets, recent statistics demonstrate that the average initial income returns are higher than in recent years."

Figures from Hamptons International show some of the best yields outside of London can currently be found in Brighton (4.32 per cent), Hove (4.22 per cent) and St Albans (4.02 per cent).