Rents are continuing to rise rapidly in the face of strong tenant demand and a shortage of available properties, research indicated today.
A balance of 40% more surveyors reported increases in rents during the three months to the end of January, the highest level recorded by the Royal Institution of Chartered Surveyors since it first began the survey in 1998.
The group said the ongoing problems in the mortgage market and the high deposits lenders demanded from borrowers, were preventing many people from becoming homeowners, leading to rapid growth in tenant demand since late 2009.
About 32% more surveyors reported a rise in people looking to rent than those who saw a fall, in the latest survey, with houses more in demand than flats.
But at the same time, the supply of rental property continued to decrease, with a balance of 4% of surveyors saying fewer properties had become available during the period.
Rics said there had also been a shift in who was renting properties, with stock from private landlords falling from 80% of the market before 2009 to around 70% now, possibly as a result of buy-to-let investors also struggling to raise the mortgage finance they need.
Meanwhile, the economic downturn has led to the proportion of social tenants nearly doubling, rising from 6% two years ago to 11% now.
Looking ahead, surveyors remain optimistic that the market will continue to be buoyant, with a balance of 37% predicting further rent rises during the coming three months.
Jeremy Leaf, a spokesman for Rics, said: "The current buoyant state of the rental market is likely to persist for some time to come, given the challenges facing the sales market.
"It is unlikely that finance for first-time buyers will become much more readily available, while uncertainty over the economy may also deter potential homebuyers.
"As a result, demand for property to rent will remain strong and in all probability will continue to outstrip supply.
"In this environment, rents will remain on an upward trajectory adding to the pressure on many households whose incomes are already being squeezed by rising inflation prices and the hike in VAT."
But the group added that there were "significant" regional differences, with rents particularly strong in London and the South East, but they were falling in the South West.
Demand for rented accommodation is also strongest in the South East, while it picked up in the Midlands and Wales during the three months. New instructions fell most steeply in the North, although they rose in the Midlands.Reuse content