Greyfox are finding that the number of homes available to let is falling while demand for rental accommodation is rising, this is being backed up by new research.

41% of letting agents said there were more potential tenants than properties in the final quarter of 2009, said the Association of Residential Letting Agents (Arla).

This was up from 24% during the three months to the end of September.

Demand for rental properties is increasing because people are struggling to find properties to buy or mortgages that they qualify for.

This has led to a rise in so-called reluctant tenants, which is a marked turnaround from early last year.

At that time, the rental market was flooded with properties from so-called accidental landlords, as people who had been unable to sell their home while house prices were falling, were forced to rent it out instead.

But the number of accidental landlords has fallen in recent months as the property market has picked up, enabling them to sell their homes.

At the same time, many people who would like to buy a property are struggling to find somewhere suitable, due to the shortage of homes on the market.

And others are unable to raise the deposits they need to meet the strict lending criteria of banks and building societies, forcing them to rent instead.

Around 54% of letting agents said they thought consumers were being forced to rent a property rather than buy one.

The research also showed that the length of time for which a property is empty between tenants fell slightly during the fourth quarter to 3.9 weeks, down from four weeks during the previous three months.

Ian Potter, operations manager at Arla, said: "New tenants include those homeowners who were forced to sell their home during the last year either due to financial instability or a job move.

"And many people now in a position to buy are struggling to find the right property, as there is also a shortage of both properties for sale and realistic mortgages."

But he warned that, while the private rented sector would be key to meeting the accommodation needs of future generations, it was likely to struggle without significant Government support.

Phil Peartree Sales Director at Greyfox said "we have found being working with our Landlords offering high levels of customer service has meant we have been able to keep a healthy stock of good quality properties".