Average rents are now at their lowest level since last July 2012, although the figures are still 2.8% higher than a year ago.
The rate fell by 0.3% last month to £732, with January seeing a monthly fall for the fourth time in five years, says LSL Property Services, which runs chains Your Move and Reeds Rains.
However, the rate of decrease in January slowed to a third of the level seen in December, and six regions saw rent drops compared to seven in December. The largest fall for the month was in the south east at 1.5%, followed by Yorkshire and the Humber at 0.9%.
Four regions saw rises in rent, including the East Midlands where the average rate grew by 1.2%, and the West Midlands with a 0.9% rise.
Annually, London saw the fastest growth in rents with a 5.2% increase. This equates to £54 per month. The South East was next with a 3.5% rise.
The sharpest annual falls were in Yorkshire and the Humber with a 0.6% drop and the West Midlands with a 0.3% drop.
According to David Newnes, the firm’s director, the improving mortgage market at the start of 2013 has helped take some pressure off a limited supply of rental property during a period when tenants are less likely to move.
However, he warned that the dip in competition is not expected to last long.
The pace of monthly rent falls has slowed and tenant activity is already picking up, Newnes explained. The private rented sector is set for a spring bounce and rents are likely to climb once more, he predicted.
Annual yields on rented properties stood at 5.7% in January, representing an average of £9,369 made up of £7,840 rental income and £1,529 capital gain. The average yield was 5.3% in January, up slightly from 5.2% in January 2011.
These figures mean that if rental property prices continue on the same trend, the average investor in England and Wales could make an annual return of 8.8% in the next 12 months.
