UK rents are set to soar by 15 per cent over the next five years, as the supply of rental accommodation dwindles and demand from tenants grows, according to a survey.

Rents are expected to increase by nearly 2 per cent across the UK over the next 12 months, according to the latest survey from the Royal Institution of Chartered Surveyors (Rics).

Rics said small landlords are being hit by the withdrawal of tax breaks and the extra 3 per cent on stamp duty on second homes, while more people are looking to rent, partly because they cannot afford to buy their own homes.

The survey showed 22 per cent of respondents reported a fall in new landlord instructions in the last three months.

The shortfall in new rental accommodation is predicted to push rents up by 15 per cent by the middle of 2023. East Anglia and the south-west of England are likely to see the sharpest growth over the period.

Simon Rubinsohn, the chief economist at Rics, said: “The impact of recent and ongoing tax changes is clearly having a material impact on the buy-to-let sector, as intended.

"The risk, as we have highlighted previously, is that a reduced pipeline of supply will gradually feed through into higher rents in the absence of either a significant uplift in the build-to-rent programme, or government-funded social housing.

“At the present time, there is little evidence that either is likely to make up the shortfall. This augurs ill for those many households for whom owner occupation is either out of reach financially or just not a suitable tenure.”

Figures from the tenant referencing company HomeLet showed average rents in London rose 3.3 per cent year-on-year in July to £1,615 while the average rent in the rest of the UK was up 1 per cent to £777.