Rents fall as market is flooded

"The Loans Search...."

The cost of the average rent is being forced down as the number of rental properties on the market increases rapidly, according to new research.

According to property search engine Globrix the number of homes featuring on its 'to rent' section had risen by 88% in January with 53,547 properties listed, compared with December when there were 28,489.

For the first three weeks of this month the number of available rental homes was also 40% greater than the whole December.

Globrix said the rental market had seen an increase in the number of available properties as people who have not been able to sell their homes decide to rent them out.

However, the company has warned the rise in rental properties was driving rents down because landlords are keen to get tenants to move in. It said the average rent in February was £795 a month, down from a high of £950 a month in May.

The jump in new rental properties becoming available has been steepest in Cardiff, where listings rose by 244% in January compared with December, while in Cambridge they were 231% higher and in Hull they rose by 216%.

Coventry saw a 211% increase in rental listings during January, while in Bath, Doncaster, Birmingham, Salford, Brighton, Glasgow and Swindon, they were up by more than 150%.

Daniel Lee, chief executive of Globrix, said: "With the number of new rental properties coming onto the market rising dramatically since the beginning of the year, the decline in rental values that began in the second half of 2008 has accelerated and is likely to get worse as supply continues to outstrip demand.

"This sudden surge in new rental properties is a result of the restricted availability of mortgages, the lack of buyer confidence and the dramatic slump in property sales in the second half of 2008.

"Unfortunately, while tenant demand is still high, it is nowhere near high enough to keep up with the avalanche of new properties flooding the market."

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