Fewer people will invest in the private rented sector should chancellor George Osborne choose to increase the rate of capital gains tax (CGT) in tomorrow's (June 22nd) Emergency Budget, it has been found.

When asked by the Royal Institution of Chartered Surveyors (RICS) to assess the impact of a CGT rise, 72 per cent of the surveyors polled said they believed it would put investors off from entering the private rented sector.

Surveyors in the West Midlands were most concerned about the impact of a higher rate of CGT, with 100 per cent of the respondents saying it would deter investors.

Opinion was more divided in the north-west, with just 58 per cent envisaging reduced investment .

According to RICS chief economist Simon Rubinsohn, this could have a significant impact on the property market.

Our research indicates that an increase in the rate of CGT is likely to deter new investors from entering the buy-to-let market, at a time of acute shortage of affordable accommodation, he confirmed.

And while it is unlikely that there will be a near term glut of supply, a 'fire sale' of properties by landlords looking to avoid a higher rate of CGT could if it were to materialise have a significant impact on the fragile improvement in sentiment in the residential sector.

Last week, Virgin Money reported that an increasing number of independent financial advisers are encouraging investors to buy UK shares as confidence in the market returns.