With the UK rental market continuing to recover (rents up £10 since April and at their highest since February), a shortage of houses to rent may be starting to emerge, as investors decide to dispose of houses in a strengthening sales market rather than rent them out.

However, the market remains awash with flats, with surplus properties available for rent tending to push rents downwards, FindaProperty.com Rental Index reveals. Overall, 82 per cent of households (including owner occupiers and renters) live in houses as opposed to flats, while in the PRS 61 per cent of households live in houses (based on the latest Survey of English Housing).

This British preference to live in a house may be helping the rentals market too, with demand for an independent entrance and a roof pushing rents up for four consecutive months – by 2.5 per cent or £21 from £847 in April 2009 to £868 in August. In contrast, flats are languishing, with a 2.6 per cent decline in asking rents since February – as rents asked for by landlords fell by £20 from £769 to £749 pcm.

The key to the different relative performance of the two property types is supply. Available houses have declined by a massive 16 per cent since February, partly based on tenant demand and partly because landlords have been taking advantage of a recovering property market to sell. There remains an oversupply of flats, however - with 13.4 per cent more available to rent now than six months ago.