New instructions are rising faster than demand from tenants, causing rents to come down, the Royal Institution of Chartered Surveyors said. It said gross yields from lettings were already falling, with a growing number of properties remaining unlet.
London led the decline, with both house and flat rentals suffering from the huge surge of property on to the market. Only the South-west and East Anglia have witnessed a rise in rents, with all other regions experiencing a fall.
"There is currently an oversupply of property in the market due to the success of the buy-to-let scheme," said RICS spokesman Ian Perry.
"Low mortgage rates are encouraging people into buying rather than renting. With further falls in rent anticipated by surveyors and house prices expected to remain strong, this trend looks set to continue."
A net balance of 16 per cent of surveyors expected demand to increase over the three months to October compared with 38 per cent in the last report. RICS said the prospect for letting out homes was "gloomy" especially in London, the South and Midlands.
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