New tenant demand has once again outpaced the supply of rental property in the three months to July, as many continued to turn to the lettings sector, new data from the Royal Institution of Chartered Surveyors (Rics) has shown.

As a result of this imbalance, rents continued to increase, although the Rics Residential Letting Survey indicated that the pace of growth moderated slightly, with 34 per cent more surveyors reporting a rise in rents rather than a fall, compared with 42 per cent in the previous three month period.

Significantly, the imbalance between demand and supply is thought likely to persist with the survey results suggesting that further gains in rents are likely over the coming months.

One of the main drivers of the strong demand for rental property is that potential first-time buyers are struggling to find mortgage finance. As a result, 25 per cent more chartered surveyors reported a rise in demand rather than a fall.

The survey also found that new landlord instructions, which indicate the flow of rental property coming to the market, continue to edge upwards albeit only modestly, with just five per cent more respondents reporting a rise in new instructions than a fall.

Surveyors report that where tenancies are coming up for renewal, some landlords - particularly those in London and the south east - are now choosing to put their properties on the sales market, leaving fewer rental properties available.

James Scott-Lee, spokesperson for Rics, said: "The combination of strong tenant demand and a limited stock of good quality properties on offer is pushing rents ever higher across much of the country. This is the case both for houses and flats.

"Moreover, with mortgage finance for first time buyers likely to remain in short supply for some time to come, this imbalance is set to persist. The inevitable outcome is that rents will continue to increase."