Rents 'to increase by up to 4.5%'

Some private rents are set to soar by up to 4.5% over the coming year, but most may start to level out, a survey of landlords has suggested.

Fierce competition from tenants who cannot get on the property ladder and weak lending levels to first-time buyers will keep some rents on their upward march, according to the survey from lettings network LSL Property Services, which owns chains Your Move and Reeds Rains.

Four in 10 landlords said they plan to put up rents in the coming 12 months, by 4.5% on average, while just one in 100 of those surveyed said they plan to reduce them.

However, around six out of 10 landlords said they expect to leave rents broadly unchanged, despite two thirds of those across the survey believing demand from tenants will increase over the next year.

David Newnes, director of LSL Property Services, said: "As long as lending to first-time buyers remains in the doldrums, and new house building remains subdued, we won't see demand for rental accommodation tail off. In these conditions, while affordability may increasingly come into play as landlords set rents, they are far more likely to continue to rise than tumble in the coming 12 months."

The lettings network recently found that average rents in England and Wales reached a new high of £725 a month in England and Wales in July.

Recent research carried out by comparison website MoneySupermarket has found that the range of mortgages available to first-time buyers and people with deposits of 10% or less has fallen significantly over the last six months.

The website has said it has seen little evidence so far that the Bank of England and the Treasury's recently-launched "funding for lending" scheme to unclog the flow of credit has encouraged lenders to increase the numbers of mortgages requiring lower deposits.

Lenders have also been tightening their borrowing criteria, making it harder for people to take out a deal.

The study also found that landlords themselves are finding it more difficult to take out a mortgage. Half of landlords surveyed who have recently attempted to raise mortgage finance believe it is more difficult to secure than a year ago, while only 11% believe it is easier.