Buy-to-let landlords are currently in retreat in the property market, leaving many prospective first-time buyers, including many existing tenants, in a better position to acquire a property, but that is a trend that could soon lead to an increase in rents, according to a leading property market analyst.

There are plenty of signs to suggest that landlords are withdrawing from the market, including the newly released TwentyCi National Homemover Audit that shows that there has been a 25% drop in property exchanges for properties bought for buy-to-let.

The decline is likely to be as a consequence of high stamp duty costs, the phasing out of mortgage interest relief, as well as tighter mortgage lending rules, which have forced banks and building societies to insist on greater rental cover and higher deposits.

The drop in buy-to-let purchases over the past year or so has naturally led to a fall in the number of homes coming onto the private rented sector, adding to the growing supply-demand imbalance in the market, which is likely to place upward pressure on rental values across many parts of the country.

Kate Faulkner, founder of PropertyChecklists.co.uk and consultancy Designs on Property Ltd, said: “It’s interesting to see the impact of the government tax hikes on the landlord market. Although it may appear ‘good news’ initially that there are fewer buy-to-let investors, this is likely to back fire on tenants as where there is a shortage of rental properties, rents may rise. However, it’s also likely to hit the economy which is already slowing.

“A landlord spends thousands checking a property and letting it, supporting all manner of trades and letting experts.

“A loss of money in this sector will surely impact on earnings, and therefore on economic growth.”