Tax experts had feared that property would flood on to the market from short-term buy-to-let investors seeking to capitalise on a substantial drop in tax at the beginning of April.
But just 2 per cent of landlords say the tax change will mean they sell their properties when current tenancies end, according to a Royal Institution of Chartered Surveyors report today.
Rics surveyed 500 residential letting agents, who said the landlords on their books were still mostly comfortable holding on to property, owing to the widespread increase in rental levels.
"Significantly, with the reduction in loan-to-value ratios by lenders leaving first-time buyers struggling to access the housing market, rents are now rising sharply and the expectation is that this trend will continue," said Simon Rubinsohn, Rics' chief economist. "The incentive to cash in on the lower tax rate is being outweighed by attractive yields."
The survey showed that 4.6 per cent of landlords in total were planning to sell their properties on the expiry of tenant leases in the first quarter. This is a reduction from the 6.5 per cent who said they were planning to sell in the fourth quarter of 2007.
Rics said the level could also have been influenced by several pieces of bad news from the housing market over the past month. Given widespread price decreases over the past few months, many landlords may not feel that now is the right time to sell property.
It is also becoming difficult for investors to re-enter the buy-to-let market, with more banks this week withdrawing from the sector and cutting product ranges. Chelsea Building Society withdrew its buy-to-let range for new-build flats, while Abbey has temporarily withdrawn from the market through intermediaries.
The government scaled back capital gains tax to a flat 18 per cent on April 6, which has made it more attractive for residential investors to sell their properties.
Previously, property sales by landlord would have incurred CGT of between 24 and 40 per cent, depending on how long the property had been owned.
Rics said there was evidence of both current rent increases and expectations of rises later this year.
Research from Hometrack last week showed there was a general rise of about 4 per cent in rents across the country in the first quarter, although rents in certain city-centre locations, such as Liverpool and Nottingham, were in fact falling, owing to oversupply of new-build flats.
