In contrast to the strong mortgage market in the second half of last year as reported in our other buy-to-let story today Hamptons International say that landlords are now leaving the market due to increasing pressure on yields in January.

Hamptons report that overall stock levels across London and Country branches increased 3.5% over December, continuing the ever-rising surplus. Since early last year the market has been witnessing a steady increase in rental stock; indeed by comparison stock levels are now 50% higher in London and 40% percent higher in the country than this time last year.

A number of landlords have been keen to take advantage of the normal seasonal upturn in activity at the beginning of the New Year. But this high surplus reinforces the message that, with the wide variety of properties on offer, the 2004 lettings market is firmly set in the tenant’s favour and landlords need to respond to this.

The future isn’t all that bright either, say Hamptons. Market appraisals are up 20% in London and over a third higher in our country offices. If these convert into new instructions, landlords are facing an even more competitive marketplace.

In fact many landlords have been responding, holding back on marketing their rental properties to make necessary improvements to their properties in preparation for the New Year surge.

The most encouraging news is that new tenants registering are up 30% in the Country 50% up in London over December.

James Thornett, from Hamptons at Tower Bridge said: “It has been a pleasing start to 2004, with January showing many more applicants looking to secure tenancies than the fairly quiet December.”

“Many of our tenants put off moving before the Christmas break, and looked with more urgency in the first few weeks of the New Year.”

However, urge the company, it is important to keep these figures in perspective: tenants registered are still a third lower than this time last year.