Landlords are continuing to scale back their portfolios which could push rents higher in the coming months, the Royal Institution of Chartered Surveyors (RICS) warns.

The latest RICS Residential Market Survey shows new landlord instructions in August once again saw a negative trend, with the net balance slipping to -21% from -9% in July.

Anecdotally, agents said landlords were selling up due to first of tax changes and the end of Section 21 notices.

Meanwhile, tenant demand edged up slightly over the month, although the latest net balance of +11% is softer than the +26% recorded in July.

Near-term rental price expectations continue to point to a steady increase in the months ahead, returning a net balance of +39%.

Simon Rubinsohn, chief economist for RICS, said: “Affordability remains an issue in the sales market even with somewhat cheaper finance now available but the picture appears even more acute in the lettings market where the amount of rental stock continues to diminish. Contributors continue to point to landlords looking to scale back their portfolios which will inevitably increase the imbalance that already exists in the market.”