An increasing number of UK homeowners who can't sell for the price they want are deciding to take their homes off the market and rent them out instead, and move anyway, according to the Royal Institution of Chartered Surveyors (RICS).

The phenomenon, caused by a slump in the UK sales market, has led to a dramatic rise in rental properties on the market in some areas.

So far, though, the effects of increased supply are not uniform, and many areas are still seeing increased demand from tenants pushing up rental prices, says RICS.

This is because many first-time buyers who would have bought prior to the credit crunch are now having to rent instead, soaking up the increased supply. Other homeowners further up the chain are selling and then opting to rent, to see if they can buy more for their money further down the track.

Last month, says RICS, new landlord instructions rose at the fastest rate on record, while in the last year the number of house sales has plummeted by 50%, with mortgage approvals down 70%.

"Frustrated vendors have been placing their property in the market to let as they have been unable to agree sales due to a lack of demand in the housing market," said RICS.

"Many would-be buyers have been forced to rent as the route to mortgage finance has been blocked."

Rics says 43% more of its members reported a rise in landlord instructions than saw a fall during the three months to July - up by 13 percentage points from the previous quarter.

Demand for flats is strong, but for houses it is up sharply.

The RICS findings are somewhat unexpected after we have seen several recent comments claiming rental supply is starting to exceed demand. This has especially been true of rents in central London, said to be falling because of the increased supply.

The RICS survey also found that landlords already invested are now less likely than ever to sell up - only 2.1% choosing to sell when their tenants' leases expire.
"Established investors have been reaping the benefits of the housing downturn for sometime and will continue to do so in the short term," said Rics.

But it is clear that if supply continues to rise, there will come a point when this impacts negatively on rents.

Demand from tenants is strongest in the North, while the highest number of rental instructions are coming from the Midlands and Wales.

So, if you are one of the new landlords, what do you need to know to make your rental property a success?

Responding to the new phenomenon, the Money Centre has issued a useful set of top tips for new landlords.

In fact, says the Money Centre, many newbie landlords may actually be breaking the law if they are not aware of the regulations about renting out a property.

Director of The Money Centre, Lynsey Sweales, herself a landlord, said: "I think it is a sensible idea for some homeowners to look to rent their properties out - to sell in our current climate may lose homeowners money. It is extremely important however to make sure that any new landlords take action and do their homework with rules they need to work with."

Below are some top tips to renting out your property:

Speak to your lender - your mortgage lender needs to know you are renting out your home. Some lenders will allow this but the majority won't. Speak to a buy-to-let mortgage broker (such as The Money Centre) who can help you change your mortgage over to a buy-to-let mortgage to be on the safe side.

Insurance - you need specialist landlord's insurance on your property when renting to tenants, at least buildings insurance if not contents as well should you have it rented out furnished.

Tenancy deposit scheme - this is now a legal requirement. For all tenancy agreements that started on or after the 6th April 2007 landlords are required to protect their tenants' deposit using one of the Government Authorised schemes. Within 14 days of receiving the deposit, the landlord is required to inform the tenant of how it is protected. There are three schemes to choose from. For more information visit www.direct.gov.uk/en/TenancyDeposit

Gas certificate - this is a legal requirement. You will need a new Corgi certificate each year, a copy must be left with your tenants for their records. Contact a certified Corgi registered gas engineer - found in the Yellow Pages.

Energy Performance Certificate - effective from the 1st October 2008, landlords will have to make an energy efficiency performance certificate available to prospective tenants as part of the lettings process. The certificate, valid for 10 years, rates the energy efficiency of a property on a scale of A-G, and makes recommendations for improvement. The most energy efficient homes are in a band A.

Landlords will not be under any obligation to follow any recommendation in the EPC or carry out work in improve the energy efficiency of their property. However, it is worth considering that tenants may use the certificate to help them choose which property to rent, making higher rated properties more desirable.

The EPC is required by law when a building is constructed, sold or put up for rent.

EPC's can only be produced as a result of a survey by an accreditied Domestic Energy Assessor. They are used to collect standard information on the property including its size, how it is constructed and its hot water and heating systems. There are a wide range of companies qualified to produce EPC's. You could contact Countrywide Surveyors who are a national company on 0870 22 444 63 quoting reference TMC. The cost is £65 plus VAT per property.

Tax return - as a landlord you are now running a business and you will need to complete a tax return. Any good accountant should be able to advise you and help you with the paperwork involved. The Inland Revenue can come after you years after you may have stopped renting the property, or even sold it, so don't forget this tip!

Join a Landlord Association - these organisations are a life line to any landlord. If you have any tenant problems or questions then landlords Associations are a great helping hand. You can find your local one using the internet.

Are you letting instead of selling?

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The Money Centre is one of the largest buy-to-let mortgage providers in the UK. Currently providing in excess of 8000 online mortgage quotes every month, The Money Centre now handles between £100 - £150 million of new applications every month. To get a FREE mortgage quote, click here.