High demand for rental property and favourable economic conditions have encouraged more investors to enter the buy-to-let market, a new survey has revealed.

Figures compiled by the Royal Institution of Chartered Surveyors (Rics) show that the number of new landlord instructions, an indicator of buy-to-let activity, rose between April and June this year, with 20 per cent of the organisation''s membership reporting that they had seen an increase.

Rics spokesperson, Jeremy Leaf, said: "Current economic uncertainty has created an ideal platform for buy-to-let investors to cash in on rising rental levels."

"Rising rents are offering some compensation for landlords that are experiencing higher borrowing costs although buy-to-let investment will struggle for funding in 2008 as lenders become more discriminating," he added.

It was also noted that recent interest rate rises may be starting to have an effect in "some rate-sensitive areas of London and the south-east" where the number of landlords putting their properties on the market rose above the national average.

Further indicating the popularity of the buy-to-let sector, the Council of Mortgage Lenders today announced that lenders have issued loans worth £7.8 billion for purposes other than mortgaging or re-mortgaging, with buy-to-let investors responsible for a large proportion of that figure.