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People who are unable to sell their properties because of the collapse of the residential sales market are now flooding the lettings sector with unusual, high-specification homes that are often being offered to tenants at bargain prices.
The number of properties available for rent on the Rightmove.co.uk website, which covers three-quarters of the letting-agent market, has increased by 60 per cent over the last year from 171,000 to nearly 284,000. Many agents fear that this sudden surge in so-called 'reluctant landlords' putting their properties up for letting risks destabilising the entire rental market.
The Association of Residential Letting Agents (Arla), the leading letting-agency body, has already reported a fall in rents in 'prime' central London by 8.1 per cent over the last quarter and 2.5 per cent across the country as a whole.
Ian Potter, head of operations for Arla, says that with the number of people renting their property while waiting for a better time to sell, there is now an oversupply. 'There is more of every type of property coming on the market. It is particularly noticeable in prime central London,' he says.
David Adams, head of residential property at Humberts estate agents in London, says the new army of reluctant landlords is making it very difficult for established ones.
'You have properties that have been refurbished for sale - real high-spec properties - now coming up for rent,' he says. 'These often make traditional rental properties, with their B&Q kitchens, somewhat tired by comparison and therefore more difficult to let.'
He says one of the fastest-growing lettings sectors now is country houses in places such as Berkshire and Wiltshire, which are traditionally second homes to wealthy Londoners.
'They are suffering a fall in their income, for whatever reason, and they have decided to put their properties up for rent. This has been a real big trend over the past four weeks,' he says. 'These are old mills or manor houses with land, and it is affecting landowners who have let farmhouse-type property on their estates for many years.'
Miles Shipside, commercial director of Rightmove.co.uk, says there is likely to be further downward pressure on rents: 'One leading agent reported to me that 40 per cent of properties which have failed to sell now go on to the rental market. This is leading to much bigger voids [periods when a rental property is vacant] for established landlords. One landlord who has 28 properties took nearly six weeks to let one of them, which would normally have been a dead cert for an immediate let.'
Some areas of the country are worse than others. In Bournemouth on the south coast, where there has been a lot of new-build development, there are now more than 1,000 flats on the rental market. Paul Penny, a director of Roberts Residential, a letting agent in the town, says there has been a deluge of properties on the market but just a limited number of tenants.
'A lot of people hoped to sell their properties in the summer, but, after the clocks went back, put them up for rental instead,' he says. 'As a result properties that would have fetched £750 a month are now down to £675, a drop of 10 per cent, because of the oversupply. Many can't rent their property at all.'
Zaza Patterson, lettings manager at estate agent Dreweatt Neate's office in Winchester, Hampshire, says some of the reluctant landlords have unrealistic expectations.
'They can't get their head around the fact their property is worth £50,000 less than last year. Similarly, when they put it up for rent they stick out for too high a rent also,' she says. 'Established landlords will say to me: "Just let's get it let". They know the cost of voids.'
There is evidence that reluctant landlords are increasingly unclear about what to do with their properties. According to estate agents Cluttons, 15 per cent of its clients who had tried to let out property that previously failed to sell have now put it back up for sale again.
Michael O'Flynn, content editor of the lettings and sales website Findaproperty.com, says that is indicative of the confused state of mind of many reluctant landlords: 'Many, when they let their property, still think about it as their own home and worry about things getting damaged. They can't take the detached view of many professional landlords.'
Vincenzo Rampulla of the National Landlords Association says that reluctant landlords need to realise that letting is rarely a worthwhile short-term step.
'People who put their property on the market have got to realise they could be doing it for quite some time. The market next year at this time might not be much better for sales than it is now. If they opt for renting, they really need to take a long-term view,' he says.
Patterson at Dreweatt Neate says that there is clearly a lot of stock coming up for rent in the run-up to Christmas, when it is often very difficult to find tenants. She has witnessed rents on some properties fall by as much as 20 per cent.
'Rents are dropping across the board and there are certainly bargains out there for potential tenants,' she says.
Case study
Sheila Frampton is one of the UK's growing band of 'reluctant landlords'. The 50-year-old sales and marketing executive put her large two-bedroom Georgian flat in Chichester in Sussex up for sale in January for £425,000.
The property, which is in Binderton House, the former home of Conservative Prime Minister Sir Anthony Eden, failed to sell, even after it was reduced to £395,000. 'We had someone who was interested in May but he just drifted off the scene,' she says.
She decided to rent it out privately for £900 a month since she was keen to move into a two-bedroom terraced house nearby that she had bought. 'The property is far from a typical buy-to-let. It has a massive 800 sq ft living room, a huge fireplace and 11ft-high ceilings, but it was the best option in the current market,' she says, adding that many people in the area are now letting their properties rather than selling them.
She intends to rent out the flat for as long as necessary.' It is such an unusual property that it would need the right person to fall in love with it. That could take quite a few viewings.'
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