The Stamp Duty surcharge on buy-to-let purchases which comes into effect next week will increase rent costs for tenants and trigger a decline in the supply of available properties.

The forecast comes from ARLA, which says that in February half (52%) of its members reported an uplift in interest from buyers ahead of the April 1 deadline.

After April 1, 63% of agents predict that supply will fall as landlords are pushed out of the market, and 57% believe rents will be pushed up.

In London, 73% of agents believe rents will rise.

ARLA managing director David Cox said: “The Stamp Duty changes are now imminent, and as well as hitting small landlords they will also impact institutional investors.

“Although members are reporting a rush from landlords who have been trying to snap up their buy-to-let investments, it’s likely that we’ll see the buy-to-let market drop like a stone and probably not pick up again until next year.

“This will most certainly cause rents to increase, with supply dropping, as competition for the limited availability of properties intensifies.”

ARLA also reports that demand rose by almost a fifth (19%) in February, with an average 37 prospective tenants registered per member branch.

This is the highest level seen since February last year, when an average 40 tenants were registered per branch.

Cox said: “Some landlords will simply withdraw from the market whereas others who can take the hit of the extra Stamp Duty will simply raise rents to cover the extra costs.

“The dream of home ownership will remain out of reach for many as we move closer towards becoming a nation of forever renters.”

The research for ARLA was carried out among 246 member branches between the end of February and March 11.