The number of new tenants signing up for rental property soared to an unprecedented 50,480 in the second quarter of 2010, according to the UK’s largest lettings agent Countrywide.

The group reports that, after this 16% rise, a further record 20,000 new entrants to the rental market subsequently registered during the month of July alone.

This burgeoning demand is in stark contrast to the number of rental properties coming to the market. In the three months to June 2010 the number of homes available for rent dropped by 6%.

Countrywide’s latest quarterly survey also indicated that this June‘s hike in Capital Gains Tax for buy-to-let investors (from 18% to 28% for higher rate taxpayers) has done nothing to deter new landlords entering the sector, with 6% more first-time investors coming to the market in Q2.

Excess demand has pushed up average rents, with four bed family homes seeing the greatest price of 4% compared to the first quarter to £1,090 per calendar month.

Overall there was an average of 5.5 tenants chasing every available property in Q2, up from 4.9 in Q1. AS a result rental homes are now snaffled in an average of 14 days- 3 days down on the typical Q1 time period.

John Hards, Countrywide residential lettings, co-managing director said;: “The number of tenants entering the market is at unprecedented levels and we have yet to enter the peak season. Student demand for private rental accommodation will increase further with university applications at record levels.”

The continuing lack of mortgage availability preventing aspiring buyers from the property ladder is widely regarded as one of the driving forces behind the increase in demand for rental property, combined with the ongoing uncertain economic climate, which is discouraging would-be buyers from making such a large financial commitment.