Rents begin to dip in three regions: Your Move

"Tenant finances and landlord returns have also remained steady, which suggests that landlords and tenants have reached a happy equilibrium on prices."

The average rent across England and Wales grew by 2.6% in the last year, hitting an average of £861, boosted by strong growth in the South West and East Midlands.

However three regions - London, the North East and Wales - saw the average rent charged to tenants fall in the past year.

It was London which posted the biggest fall in the last 12 months, with the average rent dropping 1.4% to £1,271.

The two other surveyed areas to see prices fall were the North East and Wales. In the North East the average rent fell 0.7% in the year to August and now stands at £535. In Wales the average rent is £588 following a 0.1% fall.

Of the seven areas that grew in price, the South West was home to the biggest rises. Prices in the region grew 4.1% to reach an average of £686 in the last 12 months.

The next top performer was the East Midlands, where prices grew by 2.7% year-on-year to £656.

The South West was also the strongest region when rents were compared to the previous month. The average property in the area saw its price rise by 0.5% compared to July.

Despite falls in three regions, the average return on landlords' investment was stable between July and August, with each of the 10 regions surveyed delivering the same yield as last month.

As usual, properties in northern regions earned higher percentage returns than those located in southern areas.

The average investor in the North East enjoyed an annual yield of 5% in the year to August while in the North West this figure was 4.8%.

London landlords saw the smallest percentage returns, recording 3.2% during August.

Martyn Alderton, national lettings director at Your Move, commented: “Regionally, the market remains strong, with demand in the core market of two and three-bed properties remaining high. However, there’s no denying that challenges still remain in London where pressure on rents has continued once again.

“It appears that there is less rental stock available this year compared to the same time last year. Whilst this could be the result of tenants staying in their rental properties longer or of landlords choosing to exit the market in light of recent legislative changes – it is also true that properties are letting more quickly than they were a year ago giving the impression of fewer properties available to rent. In our experience, demand has not slowed, and when a suitable property comes to market, it is soon let. It’s this tenant demand that invariably affects rental prices – more so in some regions than others.

“The South West of England once again saw rent growth outstrip all other regions, buoyed by the popularity of its rural areas and the attractive city of Bristol.

“Tenant finances and landlord returns have also remained steady, which suggests that landlords and tenants have reached a happy equilibrium on prices.

“Even for landlords in London, some areas of the capital city are still performing strongly.”