THE rental market continues to boom as housing sales diminish according to the latest Royal Institute of Chartered Surveyors Lettings Survey.

New instructions to let (an indicator of supply) increased in the second quarter of the year at the fastest pace in the survey's history as many would-be-sellers found that becoming a landlord is a better option than selling in the current climate.

In the South West, 37 per cent or surveyors reported a rise which was slightly below the national average of 43 per cent.

Surveyors say the increase is mainly due to frustrated vendors, who have been placing their property on the market to let as they have been unable to agree sales due to a lack of demand in the housing market.

Equally both new instructions to let houses and flats increased at the fastest pace in the survey's history with 47 per cent and 39 per cent more chartered surveyors reporting a rise.

Within this 41 per cent more reported a rise in tenant lettings in the South West, down slightly from 42 per cent in the previous quarter. Demand for family homes remains stronger than for flats as many people find themselves being forced to rent as the route to mortgage finance has been blocked.

Rents have continued to rise while house prices fall, driving gross yields upwards and as a consequence rising profits have kept landlords committed to the market. The proportion of landlords opting to sell at the expiry of the tenant lease fell to 2.1 per cent, the lowest level on record. Rental expectations fell slightly with some surveyors expecting over-supply to push rents downwards in the next quarter.

Alison Whitfield from Whitton & Laing and RICS South West spokesperson, commented: "The continuing negativity within the sales market is significantly affecting the rental sector, with many agents focusing their advertising on lettings and suggesting to clients who are struggling to sell, that they may wish to consider letting instead.

"This means there is now more good quality property being offered within the market and prospective tenants have considerably more choice than in previous months.

"However potential new landlords, who are considering letting instead of selling, are often under financial pressure with high mortgages. This can lead to higher rent expectations than the market may be able to sustain for any length of time."