Comments from surveyors reveal that rents in some areas have now risen so sharply that previously affordable homes are now unattainable to many, as an increasing number of renters are priced out of the market.
Meanwhile, home ownership remains out of reach for many would-be buyers, partly because of the high deposits required by lenders, but also due to the cost of available mortgage finance.
As a result, surveyors report that many people have little choice but to rent. In the three months to April, 35% more respondents reported demand rose rather than fell – the highest level for more than two years.
Turning to supply of rental property to the market, 6% more surveyors reported new instructions from landlords increased rather than fell – taking the net balance into positive territory for the first time since April 2009.
Instructions from landlords to let flats showed the most pronounced change, with a net balance of +6% (from -7%). The increase for houses was slightly less than in the previous three month period (+2 compared with +5%).
Despite an upturn in new instructions, supply to the market still remains unable to keep up with demand. Tenants are staying longer, resulting in less availability, while fewer landlords are selling their properties at the end of a tenancy. Just 2.8% of landlords sold property in the three months to April (down from 4%).
Looking ahead, the overall rental outlook remains strong, with 33% more surveyors expecting rents to rise rather than fall. Expectations for rental prices were highest in London, followed by the Midlands, the South East and the North.
RICS UK spokesperson James Scott-Lee 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."
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