Demand for rental properties in the West Midlands rose in first few months of 2008 at the fastest rate for six years.
Rents and gross yields also continued to grow, though at a slower pace than before, according to the latest Lettings Survey by RICS, the chartered surveyors body.
It said that 18 per cent more of its members in the region reported a rise than a fall in tenant lettings in the three months to April.
Demand for both family homes and flats increased as many would-be buyers found themselves unable to step onto the property ladder. New landlord instructions in the region recovered following a modest fall in late 2007, with a similar percentage of surveyors reporting a rise.
RICS said a significant drop in demand within the housing market has pushed sellers back into rented properties, as landlords also take advantage of rising rental yields while they wait for the effect of the credit crunch to abate.
With rents rising at a slower rate, rental expectations dropped slightly in Q1 but remained above the long-running survey's average. The number of surveyors reporting a rise than a fall in rents fell by 16 per cent from the previous quarter.
Richard Franklin, RICS West Midlands residential spokesman said: "The survey findings highlight the long-term conflicting relation-ship between capital prices and rents. The demand we are seeing is being stimulated by potential house buyers being unable to secure mortgages, those selling to rent and the shrinking buy-to-let market."
Surveyors report that rents are still rising and rental expectations remain at more than double the survey's long run average.