Lack of new homes for sale is pushing up rents

A shortage of new homes coming onto the market is a main driver for booming rental prices, as more people are forced into rental accommodation, according to a new RICS Residential Lettings Survey released today.

Tenant demand is soaring as more people are priced out of the housing market, due to high property prices, caused in part by a lack of new build homes in relation to demand, and a lull in mortgage lending.

Demand for rented homes during the three months to the end of April increased by 35% compared to the previous quarter - the highest level for more than two years, encouraging landlords to increase rental prices.

Overall, 42% more surveyors reported rents rose rather than fell in the three months to April. Although rents increased across Great Britain, it was London and the South East which saw the most notable rises.

James Scott-Lee, spokesman for the RICS, said: "Although we are beginning to see more mortgages aimed at first time buyers, many potential homeowners are still restricted from getting a foot on the property ladder, leading to increased demand in an already oversubscribed rental market.

"There has been a small uplift in supply but the imbalance between demand and availability can only mean rents will continue to rise."