Weak house prices and poor demand have forced many homeowners to scrap plans to sell up, according to the Royal Institute of Chartered Surveyors’ (RICS) quarterly Lettings Survey, and become landlords instead.

The survey revealed that new instructions to let grew at its fastest pace in the survey’s history in July 2008. Its data showed +43% more chartered surveyors reported a rise than a fall in landlord instructions versus just +30% in the previous quarter, while +37% more saw a rise than a fall in tenant lettings, up from +30% in Q1 2008.

Meanwhile, many would-be buyers are now choosing to rent as they struggle to get enough cash together to satisfy cautious mortgage lenders. Gross yields have also risen sharply as the number of rents grows and house prices keep falling.

“The lettings market is booming with many vendors opting to rent their property while sales in the housing market continue to dry up,” said James Scott-Lee, RICS spokesperson. “Many are willing to ‘hold’ and await the return of capital appreciation. Becoming a landlord is now an increasingly profitable option with rising rents and yields offering good returns.”

But he did warn that the rise in supply could have an impact on rental growth as tenants enjoy wider choice.