According to data produced by the Royal Institution of Chartered Surveyors (Rics), the supply of rental accommodation rose at the fastest rate on record in the three months to July, outstripping the increase in demand from tenants.

Rics’ latest survey showed that potential homebuyers had been forced to take rental accommodation because they were unable to obtain a mortgage. In the meantime, record numbers of homeowners are being forced to rent their properties because they cannot find a buyer.

“The wider housing market stagnation has compelled increasing numbers of would-be housebuyers and sellers to seek refuge in the rental market,” Rics said. “As a result, activity in the residential lettings market is booming.”

Rics say the increase in rental accommodation had not yet slowed growth in rental prices, which continue to rise at the same rate as in the previous quarter. However, oversupply was expected to have an impact on rents in coming months. The survey showed that a smaller proportion of surveyors expected rents to continue to rise over the next quarter.

“Established investors have been reaping the benefits of the housing downturn for some time and will continue to do so in the short term,” said James Scott-Lee, a Rics spokesman.

“However, ever-increasing supply could have an impact on rental growth as tenant options increase.”

The Rics survey showed that 37 percent more surveyors reported a rise in new tenant lettings that a fall in the three months to July, compared with 30 percent in the previous quarter. At the same time, 43 percent more surveyors reported a rise in the number of new lettings instructions than a fall, also up from 30 percent in April.

Rics said that rents in London had flattened out, while around the country they are on the rise. Just 3 percent more surveyors in London reported a rise in rents than a fall in the three months to July.

London estate agents have started to see rents come under pressure as competition between new landlord’s increases.

Estate agents including Savills and Knight Frank have reported sharp price falls for some rental accommodation, mostly in the prime areas of London.

“We feel rents have come down as supply has come through from the sales market,” said Jane Ingram, head of lettings at Savills. “It has been much more of a tenants’ market.”

She said that the reduction in rents had meant landlords were not obtaining the high yields that they had hoped for.

“Yields have edged up a bit but not as dramatically as people had expected,” she added.

Rics said that rising rents coupled with falling house prices had driven up gross rental yields for landlords in the three months to July, and meant that fewer than ever had opted to sell their properties in the three-month period.

Just 2.1 percent of landlords sold their properties at the expiry of the tenant lease, the lowest on record.