Surge in 'accidental landlords' causes sharp fall in rents

The private rental sector has seen rents drop dramatically over recent months, as the market is saturated with hard-to-sell properties and 'reluctant landlords', an industry survey has shown.

Figures from Findaproperty.com suggest that average rental prices fell by 1.2% during February - twice the rate of decline seen in January, and a 4.8% fall from February 2008.

It takes average rent to £830 per month, down £42 in the last 12 months - a slide triggered by large numbers of sellers renting out their properties until the market picks up.

Stock levels have risen by 43% since September last year, according to Findaproperty.

As recently as last summer, many landlords in the private rented sector were hoping to do well from increased tenant demand, as the domestic property market slowed.

But as Elizabeth Brogan, senior policy officer at the National Landlords Association (NLA), told More Than Business News: "In the current housing market, many people are being tempted to rent out the properties they cannot sell, flooding the market in some areas with properties to let and leading to the rise of the reluctant landlord'.

"71% of NLA members are concerned that rent arrears will rise in 2009, so it is important to remember that while the drop in rents is occurring in some parts of the country, for landlords, rental arrears is a bigger issue than falling rents."

A separate survey by property website Globrix has calculated that average monthly rental prices have dropped by 16.3% since May 2008, falling from £950 to £795.

"Tenants hold all the trump cards and, increasingly, they know it," commented estate agent Zaza Patterson, quoted on the Globrix blog.

Figures released today by the Land Registry show that house prices in England and Wales fell by 15.1% in the year to January 2009.

IMAGE John Birdsall/John Birdsall/PA Photos