The rental market boomed as housing sales in July diminished, according to the Royal Institute of Chartered Surveyors (RICS) Lettings Survey.

New instructions to let increased 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.

43% more Chartered Surveyors reported a rise than a fall in landlord instructions compared to 30% in the previous quarter. Equally both new instructions to let houses and flats increased at the fastest pace in the survey's history with 47% and 39% more Chartered Surveyors reporting a rise than a fall respectively. Surveyors report that frustrated vendors have been placing their property in the market to let as they have been unable to agree sales due to a lack of demand in the housing market.

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Rents have continued to rise while house prices fall, driving gross yields upwards. 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, the lowest level on record. Rental expectations fell slightly with some surveyors expecting over-supply to push rents downwards in the next quarter.

RICS Spokesperson James Scott-Lee commented: "The lettings market is booming with many vendors opting to rent their property while sales in the housing market continue to dry up. Many are willing to "hold" and await the return of capital appreciation. Becoming a landlord is now an increasingly profitable option with rising rents and yields offering good returns. Established investors have been reaping the benefits of the housing downturn for sometime and will continue to do so in the short term. However, ever increasing supply could have an impact on rental growth as tenant options increase."

(CD/NS)