Demand for rental property is increasing with fewer properties available to rent in the UK.

With the current upward trend in the housing market this is having a considerable effect on the lettings market with many of the accidental landlords returning to the sales market to take advantage of the recent price increases. With the recent oversupply now reversing this is impacting on rental prices and tenants no longer have as strong a bargaining power as they did.

It is therefore widely expected that rental prices in the UK lettings market are set to increase in the New Year; the number of rental properties coming on to the market has fallen in the latter half of 2009, according to the UK's favourite letting only portal.

Rental property supply and demand. Source - Lettingweb.com

The recent pick up in the property market has led to a drop off in the number of rental properties, particularly houses, being made available and as a result surveyor optimism has increased for the first time since July 2008.

According to the latest RICS Lettings survey around 22% more surveyors expect rents to rise rather than fall in the next three months - the drop off in supply being the main driver for this emerging confidence. A net balance of 11% of surveyors are seeing the number of new instructions coming onto the market falling rather than rising. This is in stark contrast to the levels seen late last year when the housing market was still suffering from falling prices and many would-be sellers were turning to the lettings market when their houses failed to sell.

Only 4% of chartered surveyors are still reporting falling rather than rising rents, for flats to rent in the UK, indicating that the downward pressure on rents is already starting to ease. Significantly London and the North are already seeing the majority of surveyors reporting price rises over the past three months, which supports this newfound confidence in the market.

Information supplied by www.lettingnews.com