Rental market tightens as landlord instructions decline
The UK housing market continued to lose momentum in April, with buyer enquiries and sales activity declining amid lingering economic uncertainty, according to the latest survey from the Royal Institution of Chartered Surveyors (RICS).
The number of new buyer enquiries fell for the third straight month, with a net balance of -33% of surveyors reporting fewer queries from potential purchasers. The figure reflects ongoing affordability challenges and restrictive lending conditions, which are making buyers more cautious.
Agreed sales also declined, with a net balance of -31% recording a drop in transactions — the weakest result since August 2023, when the figure reached -42%.
Expectations for the next three months remain subdued, with a net balance of -15% predicting a further drop in sales. However, survey responses suggest some optimism over the longer term, with a net balance of +17% forecasting sales growth over the next 12 months, up from +11% in March.
House prices edged slightly into negative territory, with a net balance of -3% in April compared to +2% previously. While short-term price expectations remain negative at -21%, longer-term views are more stable, with 39% of respondents expecting prices to rise over the coming year.
The supply of homes coming onto the market showed little change. New instructions held at a net balance of +6% for the second month running, while the level of appraisals rose only slightly.
“Although geopolitical developments haven’t helped the mood music in the residential market over the past month, the main reason for the dip in the key RICS sales activity metrics lies in the expiry of the stamp duty holiday at the end of March,” said RICS chief economist Simon Rubinsohn (pictured left).
“We've been hearing and seeing the volatility linked to the October Reeves Budget, where she declined to extend the stamp duty concession and announced multiple other changes to national insurance, taxes and others,” added Tomer Aboody (pictured centre), director at specialist lender MT Finance. “The end of the stamp duty holiday in March saw a big push in transactions completing by the end of the month so that buyers could avoid the tax increase.
“We are now seeing the fallout, with transactions and mortgage approvals falling, as buyers and sellers wait to see whether the anticipated interest rate cut comes. If it does, in turn this will hopefully encourage banks to reduce their mortgage rates, allowing affordability to ease and encouraging market activity.”
According to Rubinsohn, however, near term expectations indicators suggest the subdued trend will persist for the next few months at least.
“But looking beyond this, the results are more encouraging reflecting in part the prospect of deeper interest rate cuts than previously anticipated,” he said.
Rental market under continued pressure
Tenant demand strengthened in the three months to April, with a net balance of +14% reporting higher interest, up from +3% in the previous quarter. However, the number of new landlord instructions continued to fall, with a net balance of -26%, worsening from -19% previously.
The near-term rent expectations measure stands at +25%, indicating further upward pressure on rental prices. Some contributors noted that recent international developments, such as tariff announcements by the Trump administration, have added to uncertainty. Nonetheless, others pointed to the resilience of the market despite global headwinds.
“With demand continuing to grow, there appears little relief in store for tenants in terms of the upward pressure on rents,” Rubinsohn said. “Critically, even with the rise in the build to rent sector, the shortfall of affordable rental stock looks set to remain substantial.”
Jeremy Leaf (pictured right), a north London estate agent and former RICS residential chairman, noted more tenant interest over the past month but a resistance to paying higher rents.
“Lack of supply, particularly of one- and two-bedroom flats in more popular areas, often prompted by landlords deciding not to renew, is preventing a more marked downturn in values,” he said. “Looking forward, we do not expect much improvement in stock shortages, particularly as the Renters’ Rights Bill nears the statute book so the imbalance with demand is likely to continue.”
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