Access to the buy-to-let market has become harder for new landlords as mortgage deals became scarce, says the Royal Institution of Chartered Surveyors.
The latest RICS lettings survey of Q4 2007 shows the first fall in new landlord instructions to surveyors to let their properties since the study began in 1998.
RICS says the credit crunch has restricted the number of buy-to-let mortgages approved as well as the number of deals available to investors.
But it says established investors are reaping the benefits, as gross yields increased at their fastest pace since Q3 2005.
Barry Hall, spokesman for RICS, says: “While banks remain cautious about offering loans, demand for rental property will continue to increase with many would-be-buyers unable to make the jump to home ownership.
“Established investors continue to reap the benefits of the current uncertainty in the housing market and have been enjoying the fruits of rising rents, but new investors are struggling to get the necessary finance to enjoy this buoyant sector.”
RICS says demand for rental properties continued to grow as landlords saw yields increase.
It shows that 16% more chartered surveyors reported a rise than a fall in tenant lettings, down from 20% in the last quarter.
The survey reveals that 23% more chartered surveyors reported a rise than a fall in demand for houses.
Only 12% of surveyors reported a rise in demand for flats, down from 15% last quarter.
RICS says demand for family homes remains stronger than for flats due to an oversupply of new-build property.