More people are hunting for rental homes, while there is a shortage of available property.

With some ‘accidental’ landlords selling, there are fewer rental homes and rents have stabilised for the first time in a year, according to Savills Research. Eight per cent of tenants have renewed contracts this quarter, 20 per cent higher than this time last year.

Prime central London saw modest growth of one per cent in the third quarter of 2009, leaving prime rental values 10.8 per cent down from June 2008’s market peak.

Jane Ingram, head of Savills Lettings says: “With the economic outlook still uncertain, the return of corporate family tenants remains limited. As a result, rents are expected at best to plateau at their latest level during 2010.”

There are increasing numbers of tenants who have sold their property and cannot find what they want to buy, or have decided to stay out of the market for the time being, points out Rachel Askew from John D Wood & Co, Belgravia.

“These renters, being in the main British and used to the vagaries of Victorian property, make good tenants for the majority of landlords as they are used to dealing with utility companies, Sky and the local council and can figure out how the central heating works. And they tend to settle into their new homes more quickly than those who have arrived from overseas,” Askew explains.

Particularly popular are smaller homes costing up to £1000 a week and anything in a new development. “These properties are going out the window and some deals are agreed even before the landlord completes on the unit,” reports Anna Kind from Kings Sturge.

A good proportion of these tenants might have used relocation agents to get their first homes and now are trading up themselves to something bigger or in a better location,” Kind adds.