The RICS has expressed hopes that regulation of the agency sector will help stem the decline in landlord instructions.
The August RICS Residential Market Survey says that tenant demand rose for the eighth consecutive month and is regularly outstripping supply as landlord instructions continue to decline.
Surveyors warn this could result in rent increases.
Hew Edgar, head of UK Government relations and city at RICS, said: “The ever-changing policy landscape is damaging confidence in the lettings market.
“But the private rented sector has the enormous potential to deliver more homes that are urgently needed, and to contribute to the alleviation of the affordability issues which are being exacerbated by the ongoing dearth of supply across all tenures.
“The need for the regulation of property agents – including those operating in the PRS – is critical in order to make the sector more attractive to landlords, and of equal importance, enhance the landlord-tenant relationship.
“To assist this recommended regulation, we are working with industry to develop an approved PRS Code of Practice.
“We have also worked with Lord Best as part of his Regulation of Property Agents (RoPA) working group, to help bring positive change and increase public confidence in the sector, parts of which have been likened to the wild west.”
Surveyors remained gloomy about the sales market, reporting that new instructions and buyer enquiries remained flat.
The research – among 750 branches coming from 361 responses – showed that 23% more surveyors expect sales to fall in the final three months of the year than expect sales to rise, a period encompassing the current October 31 Brexit deadline.
This was the poorest outlook since February.
London is most pessimistic, with a net balance of 41% expecting a fall rather than a rise in transactions over the next three months.
Demand from new buyers in London also fell, RICS said.
There was more optimism about the next 12 months nationally, with 5% more expecting an increase rather than a decrease in activity.