Recent improvements in the mortgage market and a steady increase in lending is reducing the supply of rental properties on the market, which will subsequently push up the cost of renting, RICS has suggested.
An easing in mortgage lending and rising house prices have resulted in the number of rental properties coming onto the market falling for the first time since January 2008.
According to the RICS Residential Lettings Survey for the third quarter of 2009, surveyors expect this to push up the cost of renting a property by the New Year.
When house prices were still falling last year and demand for properties was low, would-be house sellers were holding off putting their properties on the market, or were simply unable to sell, which saw many turn to the lettings market as an alternative.
The number of houses available to rent has now seen a particularly sharp drop off, as homeowners who had been waiting to move until the market recovered are taking advantage of a steady increase in house prices and higher demand.
The influx of available houses in the lettings market pushed rents downward, but now only four per cent of chartered surveyors are now reporting falling rather than rising rents, indicating that the pressure has eased significantly.
Demand for rental property has remained strong whilst those potential first time buyers who could not get on the property ladder were forced to continue renting, and 16 per cent more surveyors saw rental property activity increase during the third quarter, with demand for houses being the strongest.
RICS spokesperson Jeremy Leaf commented: "It seems the current upward trend in the housing market is having a more significant effect on the lettings market, with many of the accidental landlords returning to the sales market to take advantage of the recent price increases.
"As a result the recent oversupply is reversing, with new instructions at the lowest levels we have seen. This of course is impacting on prices and tenants no longer have as strong a bargaining power as they did."
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