DEMAND for rental homes in the United Kingdom climbed at the fastest pace in at least a decade as rising borrowing costs deterred buyers, a report by the Royal Institution of Chartered Surveyors has shown.
In the second quarter, 37 percent more real estate brokers reported an increase in new rental contracts than those that said there was a drop, the London-based industry group said.
RICS members also reported the largest increase in mandates to rent out properties since the survey was first carried out 10 years ago. Bloomberg News reported.
"Those unable to obtain mortgage finance are opting to rent in the meantime," RICS said. That is causing "more would-be home sellers to become landlords."
Average asking prices for homes in the UK fell by 4.8 percent in August from a year earlier, according to an index compiled by Rightmove Plc, the country's most-used property Website. That was the biggest decline since at least 2002 as banks curbed lending and charged borrowers more.
Lending restrictions caused the number of mortgages available to home buyers to dwindle to 3,748 at the start of August from 13,027 a year ago, according to personal finance Website Moneyfacts.
On August 5, Chancellor of the Exchequer Alistair Darling left open the possibility of a temporary suspension of a tax on house sales to revive the property market.
A poll of 1,350 members of the National Association of Estate Agents last week showed that a quarter reported that a sale had fallen through as vendors waited for the tax break to be implemented.