While anyone trying to sell their home in the past year has a had a tough time of it, struggling to find a bank willing to give them a mortgage, landlords have been enjoying something of a boom. Experienced players in the rental market have found that letting has been a profitable business, and most agents have been reporting a rise in rents and therefore yields.

The rising cost of borrowing – and the difficulty in finding a lender – also put a swift end to the number of new landlords entering the market, which put the brakes on supply while at the same time increasing demand from would-be tenants. After all, youngsters who had been planning to buy their first home have had to put their plans on hold and carry on renting. Not even the Government’s stamp duty holiday looks likely to reverse that decision.

However, the market now appears to be changing. Homeowners who had been trying to sell have now decided to let their property and agents have reported a surge of new instructions from frustrated sellers, therefore adding supply to the market.

Add to that job losses in the City following last month’s collapse of Lehman Brothers, and the worldwide recession that has already led to a slight slowdown in the number of overseas tenants flocking to the capital, and the demand side of the equation has also tightened.

In its latest report on the state of the lettings market, the Royal Institution of Chartered Surveyors believes that conditions for landlords will worsen over the coming months.

There is no suggestion yet that rents will fall, but with mortgage costs tipped to rise, investors are likely to see their profits diminish. Preparing for the worst before it happens makes good sense. Landlords with tenancies coming to an end shortly should do everything possible to encourage their tenants to sign a new agreement, even if that means spending a bit of cash on redecorating or improving facilities.

Similarly, landlords with empty property should ensure they are reaching the broadest possible audience by using an agent with a solid track record and listening to their advice, not just on price but also on any improvements that will appeal to tenants, who will soon find they have plenty of flats and houses to choose from.