Tenants saw private rents rise by 0.4% in October pushing the average rent across England and Wales to a new record high of £744 per month.
The latest increase means rents have now risen for seven consecutive months and are, on average, 3.4% higher than this time last year.
Today's figures from the LSL Property Services Buy-to-Let Index show rents have continued to rise significantly in London (0.9%) and the South East (0.7%). Over the past 12 months average rents have increased by 7% in London to £1,102 - breaking the £1,100 barrier for the first time.
Five regions saw rents fall in October, with the sharpest decreases in Wales and the East Midlands. Rents in Wales fell by 1.6%, while those in the East Midlands dropped 1.8% – the first fall in this region since March.
David Newnes, director of LSL Property Services, said: “Rents may be rising but the good news for tenants is that the rate of increase is at its lowest in five months. A combination of improved buyer activity and a seasonal slowdown has taken some of the heat out of the rental market as it enters the traditionally quieter final months of the year. However, despite the deceleration, the fact that monthly rents rose by twice the rate seen a year ago points to the underlying strength of tenant demand.”
“Looking ahead, it’s difficult to see rents remaining stationary once the winter lull has passed. Admittedly, the sales market has shown signs of life in the last month, and the Funding for Lending Scheme seems to be acting as a catalyst for a modest improvement in the mortgage market.
"However, banks still need to set aside large sums of money for high LTV lending, so in the longer term the number of first time buyers won’t return to the level necessary to significantly undercut the strong demand for rental property.”
Meanwhile, the total amount of rent late or unpaid fell to the lowest level since January 2011, with total arrears of £265m, down from £297m in September. This equates to 8.1% of all rent across England and Wales.
Newnes concludes: “An improving economy and a resilient jobs market have helped tenants get on top of their rent. But we’ve also seen a change from landlords, who are cherry-picking the most financially robust tenants – especially for the most expensive properties. Property investors have become incredibly rigorous with their checks on prospective tenants, and are feeling the benefit.
“Tenants, too, have cut down on spending as a necessity. Whether tenants can keep up this prudence over the festive season remains to be seen. 2013 will bring more austerity, and if rents rise further, arrears are unlikely to continue to fall.”