The lettings market continues to live in the shadow of a very buoyant sales market, Hamptons International says. Landlords are considering all options when it comes to getting a better return on their investment properties.

This is reflected in the higher number of properties being withdrawn from the lettings market. Last month 19% more of our London landlords withdrew their properties than in March 2003, and managers in several areas report that many are considering the booming sales market:

"Landlords are testing the sales market with lots of Market Appraisals, as they want to see what they can get for their properties," said Vicky Bramhall, of Pimlico and Westminster branch.

"Many landlords are disheartened by rental yields, which in some cases will not even cover their mortgages. They are therefore opting for the better returns of the sales market," said Sophie Raikes, of the Clapham office.

And Claire Gibb, of the Knightsbridge office said, "Over the last month we have noticed that stock levels are slowly dropping. This is likely to be a future trend with more investors opting to sell their properties for high returns."

In fact, although across Hamptons' network rental stock levels are 41% higher than this time last year; the continuous rising levels they have been reporting have definitely slowed this year, increasing by less than 2% over February and now 5% lower than January. Could this be a sign that stock levels have peaked and the ratio of stock to applicants is finally narrowing?

This reduction is even being felt at several branches for the first time in many months, but Managers do report a very inconsistent market, for example:

Sophie Raikes, of Clapham said, "The market seems to be going up and down recently and is very unpredictable. February was a very slow month in which we saw a shortage of stock against applicants. In March our stock levels went up while applicants were very thin on the ground. Then, in the last couple of weeks, the market turned around again and we've let all our stock."

Tenants request improved facilities

Claire Gibb, Manager, Knightsbridge office said,"Several landlords have been frightened away from the lettings market due the large number requests they are receiving from potential tenant's. Although usually these are not particularly demanding requests, some are worried that the demands will not stop here. 'First time' landlords especially are finding this an expense they had not anticipated and, rather than negotiating with the tenant, they are shying away and deciding not to proceed with the offer."

In this oversupplied market, most landlords are making requested improvements as they feel it is better to have a good tenant than risk extensive void periods. Indeed our advice to landlords is that despite the initial outlay they should always look at the long-term returns - even though our data reveals that average void periods have in fact reduced:

Zoe Rose, Country Lettings Director says, "It is interesting to look at void periods and how they have reduced significantly in the last 3 months. Average voids in both London and Country branches were at a peak in July- December 2001, when some regions averaged 70 days. It is even more interesting to compare July-December 2003 - with a 55 day average void - against January-March 2004 levels, which have fallen to just 32 days."

On the demand side

New tenants registering are again down in the London and the country, say the firm. There were 9% fewer tenants registering with Hamptons last month than in February, now some 20% less than March last year. However, those tenants that are registering are clearly very active, with branches reporting that viewings are actually 2% higher than last March.

Much of this activity has converted, as data shows that the number of properties let increased by 4% over February (and 13% higher than March 03) and new business was up 3%. Renewals remained flat overall, balancing out between the country branches where they were down 21% and in London where they were 10% higher than last year.

Hamptons note an increasing trend of families moving from London and renting in a rural area before they buy, so as to "experience" the area first hand and see where is the best place to live. This is made fairly easy for them with the wide range of competitively priced rental property that is available.