The latest research from the Association of Residential Lettings Agents (ARLA) shows that there less rental properties available to rent as tenant demand increases.

Almost 70 per cent of ARLA member offices say that there are more tenants than available properties. This is an increase from the 59% recorded in the last quarter and the 24% in September 2009.

The rental supply shortage is particularly pertinent in the South East, where 76% of those surveyed are reporting more tenants than properties.

The ARLA survey has also indicated a trend by some landlords to sell property, partly due to the changes in CGT rates announced in the recent Budget.

Ian Potter, operations manager of ARLA, said: “The spring period would usually see a rise in rental properties coming onto the market, and although there is some evidence of landlords considering selling up, it is not enough to counteract the change in supply.

“This situation has been deteriorating rapidly in recent months, as the supply and demand of homes to buy is also swinging out of kilter – making the prospect of a severe rental housing shortage ever more likely.

“In his recent Budget, the Chancellor did little to incentivise investment in the Private Rented Sector – in fact, the rise in Capital Gains Tax may actually discourage some landlords from investing. This combined with low construction levels and the cap on housing benefits means that instead of the housing market getting back on its fe et, what we may well see is that of tenants not being able to afford to rent property appropriate to their needs.”