Rents are rising at the strongest pace for three years, with overall demand for rented homes remaining firm.

Despite this the recent stall in house price rises is causing jitters among some landlords says RICS (Royal Institution of Chartered Surveyors) whose latest survey of Britain’s rental market is published today 24th August 2004.

Many would be buyers are taking up rented accommodation while they see how the housing market progresses. This has contributed to rents having risen at their fastest pace since October 2001.

In the three months to July, 13 percent more surveyors reported a rise in rents than a fall, compared to 8 percent in the previous quarter. Likewise 13 percent more surveyors expect rents to rise over the next three months than fall; a figure that is firmly above the average for the past five years.

The demand / supply balance is further affected by the lowest rise in new properties entering the market for three years.

The market in London showed a marked slowdown in tenant demand, but northern regions are reporting some of the strongest rises recorded for three years. This mirrors house price trends across the regions, being strongest in regions away from London.

According to surveyors, family homes are in relatively short supply, causing their rents to rise at a faster pace than other types of property.

RICS residential lettings spokesman, Jeremy Leaf says: "Demand for rented property continues to increase, to some extent boosted by potential first time buyers who are either being priced out of the housing market, or waiting to see if house prices are really flattening out."

"Investors have become more cautious, wary of a possible peak in house values. As a result the proportion of existing landlords selling their property when tenancies come up for renewal has risen. However, this is having little impact on the wider housing market."

"Houses appear to be the most in demand from tenants, leading the upturn in rental levels. Contrary to popular belief the majority of rental properties on the market are terraced houses and semis, with flats accounting for just one third of the market, although there are urban/rural differences in these figures."

Further facts from the RICS survey:

• The average monthly rent in Great Britain (inc London) for three months to July was £727.
• The average rent for a one-bed flat in London was £1114 and £3142 per calendar month for a four-bed detached house.
• The smallest decline in gross yields were recorded in London – reflecting an upturn in rents and a slowdown in house price rises.
• The private market continues to account for the lion’s share of the lettings.

• Most tenants in the UK are young adults: almost two-thirds are aged less than 35 and a quarter under 25.
• The youngest households pay the highest rents and the oldest the lowest.
• The private rented sector accounts for 10-12 % of the UK housing stock.
• Private renting is greatest in the south-east of England, university and seaside towns and some large cities – especially London.
• One third of privately rented properties are flats, the remaining two-thirds mainly terraced or semi-detached houses.