A shrinking pool of rental properties continued to drive up rents last month, despite reduced demand from tenants.

The RICS UK Residential Property Survey reveals that demand recorded a net balance of -4% in February - the longest stretch without a positive reading since 2012.

Meanwhile, landlord instructions continued to fall, registering a net balance of -22%, likely causing further rental price rises.

Despite the subdued demand backdrop, 34% of letting agents expect rental prices to rise in the next three months.

However, there are also widespread reports of landlords quitting at offices polled by RICS around Britain.

Andrew Oulsnam, of Oulsnam in Birmingham, reports that the lettings market seems very flat with lower levels of applicants for properties and lower levels of new instructions.

“The fundamental problem remains of not enough properties to let with a steady stream of landlords selling up and leaving the market,” he said.

John Chappell, of Chappell & Co Surveyors in Skegness, added: “The annual holiday season has resulted in an increase in tenant applications as usual but unfortunately, this year, most of these cannot be accommodated because of the number of landlords leaving the market and selling up.

“We expect this trend to continue as pressure increases on landlords.”

In the sales market, buyer demand fell to its weakest level since November 2023, with a net balance of -14% in new buyer enquiries.

The RICS said concerns over interest rates, inflation, and global events have dampened buyer confidence, while the impending stamp duty deadline on April 1 is probably distorting the underlying demand picture.

Insatiable demand

Tomer Aboody, director of specialist lender MT Finance, said: "In the rental market, as landlords are continually hit there is reducing availability of rental property for tenants, which is driving up rents."

And Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: "Affordability is still acting as a check on rent rises but, lack of supply particularly of smaller flats and houses, has certainly prevented more substantial reductions in activity over the past few weeks.

“Fortunately, some flats freed up by tenants trying to buy, before becoming impossible for them to take advantage of the stamp duty concession, have bolstered availability and helped to maintain a more reasonable balance with continuing almost insatiable demand."

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