The supply of rental housing hit an 18-month high in September as fewer letting agents report rising rents. But the number of prospective tenants hit a 20-month peak.
According to the Association of Residential Letting Agents (Arla), there were 193 rental properties per branch on average in the month, the highest since April 2015. Moreover, 24% of agents saw rent hikes for tenants, the lowest level in 2016. But there was an average of 40 prospective tenants per branch, the highest level since February 2015.
"This month's findings paint a really positive picture for renters," said David Cox, managing director of Arla. "Although demand is rising, we've seen this happen gradually over the course of the year, and would expect it to slow again in line with seasonal trends over the next few months.
"On the other hand, the supply of rental stock has risen astronomically, which suggest it's not quite right that landlords are pulling out of the market as a result of Brexit."
He added: "It's good to see less landlords hiking rents this month, but 24% is still too high. The cost of renting is already high in many parts of the country and until the government converts its pledges and promises into bricks and mortar, we won't see renters reach a position where they're able to save to get on the housing ladder."
In April, the Treasury increased stamp duty on purchases of additional properties — those not intended to be the buyer's main residence — by 3%. There was a rush of purchases before April as buy-to-let investors sought to beat the tax hike, which may help explain a sudden rise in rental supply.
But there remains a significant shortage as housebuilding levels lag well behind demand. The Royal Institution of Chartered Surveyors (Rics) estimates that by 2025 there will be a shortage of 1.8 million rental homes in the UK.