Rents are rising at their fastest rate for three years as demand for homes to let continues to soar, research showed today.
Around 39% more surveyors reported a rise in rents during the third quarter than those that saw a fall, the highest level since the second quarter of 2007, the Royal Institution of Chartered Surveyors said.
The group said rents were growing as potential first-time buyers continued to struggle to secure a mortgage and raise a deposit.
A balance of 33% of surveyors said they had seen a rise in demand for rental properties during the quarter, the biggest jump since 2008.
But the number of new properties available to let fell for the fifth consecutive quarter as landlords also struggled to get mortgages to expand their buy-to-let portfolios.
Surveyors said the mismatch between supply and demand had led to properties being let very quickly, with landlords seeing very few void periods.
The situation looks likely to continue, with 34% more surveyors predicting there will be further rent rises. Rents for houses are expected to increase at a faster rate than flats.
The buoyant state of the rental market has led to very few landlords considering selling a property when a tenancy comes to an end, with just 2.5% saying they planned to do so.
RICS spokesman Jeremy Leaf said: "The lettings sector has become increasingly strong over the past nine months, in contrast to the housing market, which continues to slow.
"Many have turned to the rental market because they fear further price reductions in the housing market, or because they cannot obtain the necessary finance to buy.
"As a result, rents continue to rise, with supply failing to keep up with demand."
Read More
He also said many landlords were looking to add to their portfolios following a rise in the number of providers offering investment mortgages in recent months.
London saw the biggest increase in rents during the third quarter, with 86% more surveyors reporting a rise, the highest level recorded in the survey's history.
Nik Madan, of John D Wood & Co in London, said: "We are seeing a marked rise in achieved rents across London and the Home Counties. According to our statistics, rents since January have risen by some 9%.
"This rise has been driven by the scarcity of stock and the abundance of would-be tenants. We anticipate this rise in rents continuing throughout 2011 as a result of the difficulty in securing lending to buy and the general lack of saleable stock on the sales market."
