The supply of homes is set to fall while demand from tenants continues to increase, according to the latest research from the Residential Landlords Association (RLA).
A survey of almost 3,000 landlords has revealed that a 'perfect storm' of increased demand, landlords selling properties and deciding not to grow their portfolios will combine to have a significant impact on the supply of rental property.
Some 22% of landlords surveyed said they plan to sell at least one of their properties over the next year, while less than a fifth said they are planning to buy additional buy-to-let properties.
What's more, a third of those surveyed said they have experienced an increase in demand for rental homes over the last three years.
An imbalance of supply and demand will lead to average rents increasing, according to 47% of landlords participating in the study.
However, 35% said they believe the main reason rents will rise is the phasing out of buy-to-let mortgage interest tax relief, which commenced in April.
“As demand continues to increase for homes to rent, punitive tax changes are discouraging investment by the majority of good landlords who want to provide accommodation," says Alan Ward, RLA chairman.
He says that the government's efforts to support institutional investment in the rental sector via Build to Rent are 'welcome' but represent a 'drop in the ocean'.
“To meet demand, we need pro-growth taxation that actively supports and encourages the majority of landlords who are individuals providing good housing, to invest in the new homes to rent we so desperately need," concludes Ward.