The flurry of accidental residential landlords who joined the lettings market in the summer when their homes failed to sell, are now giving up on 'riding out the slump' and are returning to the sales market with more realistic price expectations, reports Cluttons.

Thousands of vendors found they were unable to sell their property over the summer and opted to rent it out in the short term, in the hope that the market would recover in a few months and they would achieve close to the peak prices of 2007.

However, reality has now sunk in and sellers are accepting that the market is not experiencing a short term dip, but a longer term house price correction, which has seen prices fall by approximately 25 percent from their peak.

Cluttons findings are echoed by BDI Home Finders, a buying agent for residential property across London and the South-east of England. The company has reported a surge in enquiries from buyers since the interest rate drop. The majority of these enquiries are from buyers who are in rented accommodation with savings from a previous sale in the bank.

James Hyman, Partner for Residential Sales at Cluttons, said: “Those people who need to sell their homes are realising it is not an option to sit tight and wait for prices to recover. This is good news for the sales market, which has been stalled in part by the reluctance of sellers to recognise that their homes are worth considerably less than they were a year ago.

“Many sellers, who are not in a position to rent their property out in the long term, are now accepting that they are better off selling at current prices, as the market is unlikely to recover to previous heights for some considerable time. There are plenty of buyers out there at the right price, especially in the mid-market, with large enough deposits to access finance, and there are deals to be done with reasonable sellers.”

BDI Home Finders believes concerns about where to invest savings, is driving buyers to once again look at bricks and mortar as the safer haven, in addition to the low level of return.

Tracy Kellett, MD of BDI Home Finders said: “Whilst we firmly believe this is the right time to buy for many buyers. Whilst the market as a whole may drop a little further, with professional negotiation tough deals can be made now which take that into account.”

• The National Association of Estate Agents (NAEA) has called on the Government, which is just about to issue its pre budget report, to suspend stamp duty and hold a full review into making the system work better for the consumer.

Chris Wood, President-Elect of the NAEA, said: “The Chancellor must realise that the housing market is not a piggy bank for his personal use – the gravy train is over and stamp duty cannot be used irresponsibly to boost his coffers.

“The bill for first time buyers has more than doubled in the last five years, making it impossible for many young people to start their own home. As it stands, stamp duty is a tax on aspiration – disappointing during an economic boom but unforgiveable in a faltering economy.

“We have made repeated calls for a full revision of stamp duty, and the stakes have never been higher. The Chancellor must take this opportunity to give the housing market the boost it needs.

“We now call on the Government to suspend stamp duty and hold a full review into making the system work better for the consumer. That is a discussion at which NAEA would be very happy to sit at the table.”