Rental prices increased at a slower rate in the early part of the year as some tenants began to resist the sharp rises in rent levels seen in recent quarters, according to the latest RICS Residential Lettings Survey.

Rental prices continued to increase across the UK, albeit at the slowest pace in two years, in the three months to January with a net balance of +13% of surveyors reporting increases in past rental values (from +21% in the previous quarter). With values having risen strongly for some time, it seems that the market may be beginning to level out with prospective tenants less willing to pay increasing rents.

Demand for rented accommodation remained relatively strong with 19 % more respondents reporting rises rather than falls in interest from prospective tenants. Demand has seen strong growth in recent quarters; however, with an increasing number of first time buyers looking to beat the expiry of the stamp duty holiday in March, it seems some are now turning to the sales market, slowing the pace of rental growth.

In tandem with this, supply to market remained in positive territory in the three months to January with 8% more respondents reporting rises rather than falls in new instructions. Supply has now remained in positive territory for four consecutive quarters.

Significantly, with rental growth beginning to slow in many areas of the country and a recent upturn seen in prospective buyers of property, an increased number of landlords are looking to sell at the end of a tenancy agreement. 4% of landlords chose to place their property on the sales market in the three months to January, a significant increase from the previous quarter’s reading of 2.6%.

From a regional perspective, surveyors in the North of England reported the lowest rental reading in the country, for the quarter while in London the increase in rents was the most modest since mid-2009.

Looking ahead, RICS say that chartered surveyors expect growth in rental values to continue to slow. 14% of respondents predicted rises rather than falls in prices, down from +24% in the previous quarter.