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Rental demand drops

Demand for rental properties in Britain slumped during the last quarter, a new survey has shown.Research by the Royal Institute of Chartered Surveyors (Rics) claims that in the last three months tenant demand faltered while at the same time sales increased on the back of rising rental rates.In its quarterly survey Rics says 16 per cent more chartered surveyors reported a rise rather than fall in tenant lettings, down from 28 per cent in October last year.The institute says this 12 percentage point fall is the largest drop in tenant demand since early 2005 and below the long-run average of 18 per cent.Rics explains that faltering demand is attributable to homebuyers returning to the market in the face of rising borrowing costs."Housebuyers are returning to the market to avoid rising borrowing costs, signalling a drop in demand for rental property," said Rics spokesman Jeremy Leaf."Rising borrowing costs and a subsequent drop in yields have also contributed to a worrying time for landlords. 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."Mr Leaf went on to explain that the false dawn of the government's home information packs (Hips), the introduction of which was delayed until later this year, had contributed to making the "[housing] market less tight than expected".

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