Tenants could well be hit with rises from their landlords in 2011, with more than four in ten planning on charging more this year.
Research by Paragon Group has revealed that 41% of landlords with property in the private rented sector plan to up the amount they charge their tenants during the next 12 months as a result of strengthening demand.
Only 4% of landlords said they would be reducing the amount they charge, while 55% plan to freeze the amount of rent.
Nearly a third of landlords (30.7%) plan to increase rents by up to 4% of the current value, with 10% aiming to increase the rent they charge tenants by between 4% and 8%.
Rents in the private rented sector rose steadily through last year, with the Royal Institution of Chartered Surveyors (RICS) reporting that more surveyors recorded rent increases than falls in each of the first three quarters of the year.
Latest figures from RICS showed that 34% more surveyors expect a rise in rents than a fall during the fourth quarter.
Landlords' expectations for rental inflation are mirrored by their view of tenant demand over the next 12 months. Just under half (45%) of landlords believe tenant demand will continue to grow during the year, with 44% forecasting that it will stabilise.
"Landlords are in a strong position. Tenant demand has risen faster than supply during 2010 and that is expected to continue well into 2011," said Nigel Terrington, chief executive of Paragon Group.
"This is reflected in landlords' expectations of future levels of tenant demand and also the rent they are planning to charge for their properties. There continues to be a lack of finance available in the UK mortgage market, meaning that many potential buyers are opting to rent instead.
"Meanwhile, many of the factors that have driven tenant demand in recent years, such as positive net migration, high student numbers and people preferring to buy later in life, are continuing."
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