Rents are expected to rise in early 2010 as the number of rental properties coming on to the market has fallen for the first time since January 2008, according to the Royal Institution of Chartered Surveyors’ (RICS) Q3 Residential Lettings Survey.

Due to the recent pick-up in the housing market, 22% more surveyors now expect rents to rise rather than fall in the three months to March 2010, as there has been a decrease in the number of rental properties, particularly houses, becoming available to buy and this has resulted in surveyor optimism increasing for the first time since July 2008.

New instructions have reached their lowest levels since RICS started the survey in 1998, with 11% of surveyors stating that the number of new instructions coming onto the market has fallen rather than risen.

Jeremy Leaf, RICS’ spokesperson, said: “It seems the current upward trend in the housing market is having a more significant effect on the lettings market, with many of the accidental landlords returning to the sales market to take advantage of the recent price increases. As a result the recent oversupply is reversing, with new instructions at the lowest levels we have seen. This, of course, is impacting on prices and tenants no longer have as strong a bargaining power as they did.”

The number of landlords however who are considering selling their property at the end of the tenants’ lease rose to 3.2%, the highest level since Q1 2008, and this compares with only 1.8% in the previous quarter and a low of 0.2% in Q4 2008.

There were only two regions that showed an increase in rents during the three months and they were London and the North, whereas in Scotland a fall in tenant demand coupled with a rise in instructions has resulted in a further fall in rents and the report suggested that this trend will likely continue.

S K Donald, Donald’s Chartered Surveyors in Ayrshire, said: “We are seeing difficult market conditions- slow house sales in Scotland, an increasing number of accidental landlords often offering unsuitable properties, and diluting demand. Rents and affordability are under pressure from the recession with no early improvement in sight.”