A rapid surge in rents is attracting an increasing number of investors to the buy-to-let property market.

The recent growth in house prices has led to a rise in demand for rented property in the UK, as many potential first-time buyers find themselves priced out of owning a home.

And, according to the Royal Institution of Chartered Surveyors, increased uncertainty about house prices and a slowdown in the property market are causing many would-be purchasers to adopt a "wait and see" approach.

The group said that during the second quarter of the year, 29% more surveyors reported a rise in the number of people renting than those who saw a fall, up from 15% during the previous three months.

At the same time, 20% more surveyors saw an increase in investment landlords buying properties than those who saw a decrease.

This was up from just 8% during the previous quarter and is the first time the figure moved above its long-term average of 16% for 15 months.

The group said it has never seen rents rise so fast, and it is predicting they will reach record levels during the coming quarter.

Overall, a record 39% more surveyors reported seeing an increase in rents during the period, up from 29% during the previous three months, although total yields fell for the fourth consecutive quarter as house price growth slowed.

But RICS said there is also evidence that some highly geared landlords may be feeling the pinch as a result of higher interest rates.

The number of surveyors offloading properties rose at its fastest pace for two years, although with just 6% of surveyors reporting a rise it stayed well below the peak of 10% reached during the second quarter of 2004.

RICS spokesman Jeremy Leaf said: "Current economic uncertainty has created an ideal platform for buy-to-let investors to cash in on rising rental levels.

"Many would-be buyers have decided to wait and see how the interest rate cycle will affect the market.

"Rising rents are offering some compensation for landlords that are experiencing higher borrowing costs although buy-to-let investors will struggle for funding in 2008 as lenders become more discriminating, especially for sub-prime properties."

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