Landlords listing their properties for sale before potential capital gains tax rises are adding to a widening divide between supply and demand, report letting agents from around the UK.

The latest Royal Institution of Chartered Surveyors (RICS) residential market survey reveals that September saw a +22% result for tenant demand but a further drawdown (-29%) in properties listed for rent. Unfortunately for renters, the continuing supply squeeze will likely mean further rent rises and difficulties finding a home.

It reports that while there appears to be a greater level of positivity in the market - probably connected to recent interest rate cuts - a potential rise in CGT is also compelling some homeowners to add their properties to the market, contributing to a lack of supply for renters.

RICS president Tina Paillet (pictured) says while the Renter’s Rights Bill aims to improve standards and offer better protections for tenants, it’s important these reforms don’t discourage responsible landlords from remaining in the market. “Most importantly, the planned changes in the private rental sector fall short of tackling the core issue: increasing supply and making housing more affordable for tenants,” says Paillet.

It's a scenario that is already playing out, according to Jeremy Leaf (pictured), north London estate agent and a former RICS residential chairman, who says the loss of too many good landlords without being replaced in sufficient numbers has meant choice for tenants is limited, resulting in hardening rents.

CGT increases

“When the implications of the Renters’ Rights Bill are more fully appreciated as it passes through Parliament, other landlords may follow suit if unable to sell before the expected CGT increase in the Budget,” adds Leaf.

“However, in our offices we have noticed affordability concerns are weighing heavily on tenants, so a significant proportion are simply unable to afford to pay much more. Therefore, renewals are up and landlords remaining in the sector are insisting on even stricter references before proceeding.”

Sara Palmer from The Mortgage Lender says: "iI appears that there are some landlords who are continuing to sell up rather than rent out with letting instructions dropping once again and a rise in tenant demand on the flip side."