The Royal Institute of Charted Surveyors’ (RICS) Q1 2008 Residential Lettings Survey has found that the fall in house sales have pushed vendors into the lettings market.

It found that new instructions to let properties have significantly increased in Q1 2008. As capital values decrease, rental yields are increasing, so the draw of renting a property rather than leaving it indefinitely on the market is much more appealing. The survey found that the net balance of surveyors reporting a rise in gross yields was at its highest point since the survey began.

The figures also showed that initial concerns of a mass exodus from the rental market appears to be unfounded with a fall in the percentage of landlords selling their properties when a tenant’s lease expires from 4.6% to 4.2%.

John Heron, managing director of Paragon Mortgages, sees parallels with the rental market of the early nineties. He said: “Tenant demand is currently rising rapidly as potential first time buyers struggle to get loans for house purchases. This, coupled with an increasingly difficult market environment, is causing a growing number of people to rent their homes privately instead of selling. This is actually a case of history repeating itself. The greatest driver of the private rented sector in recent times was homeowners deciding to let their properties during the downturn in the early nineties.”