With demand for rental properties increasing and the supply of properties contracting, potential tenants will face fierce competition according the Association of Residential Letting Agents (ARLA).

The number of ARLA members which reported more would-be tenants than properties available increased to 68% in Q3 2014, the third successive quarterly increase from 46% recorded in Q3 2013, 54% in Q1 2014 and 59% in Q2 2014.

David Cox, Managing Director at ARLA, said: “This quarter, we have seen demand for properties in the rental sector significantly rise, while the supply of residential rental properties has dropped. This activity has bucked the seasonal trend recorded over the past 11 years for this quarter, in which we normally see an increase in the number of new tenancies signed up. However, with landlords not investing in new BTL property tenants are finding it increasingly difficult to secure contracts.”

This is backed up by the fall in the supply of residential property on the private rental market with a 6% decrease over the previous quarter.

ARLA members also reported that the number of landlords investing in BTL property reduced by 8% to just 27%, whilst the number of landlords selling their BTL property increased by 5% to 32%.

This is the first time in 4 years that landlords selling property has exceeded those buying property. However ARLA members did report that a large proportion of BTL properties that were put up for sale have since come back onto the rental market, after landlords’ bids to sell had been unsuccessful, with the number of these properties coming back onto the lettings market rising from 9% to 16% in the last quarter.