The average rent paid in the UK increased by 0.5% to £936 per calendar month in April but rents fell in some locations, including London, the latest Countrywide index shows.
Some 11% more homes on the lettings market compared to the same time last year is likely to be behind the slowing of the market according to the index.
It shows that rents in London are down for the sixth month in a row and down 3.4% year-on-year. Rents also fell by 2.5% annually in Wales, by 1% in Scotland and by 0.1% in the East of England.
The rental report suggests that more buy to let landlords in London are looking to buy properties outside of the capital city than ever before. The proportion of London investors buying elsewhere reached 50% in 2017 compared with 19% in 2011.
Last year, London investors bought 22,296 homes outside the capital, up from 3,311 in 2010 when the Countrywide Lettings Index began and it points out that this is more than the number of homes sold in Manchester and Birmingham combined last year which was 21,951.
It also appears that a record proportion of London investors are looking North in search of higher yields and lower stamp duty costs. The East of England has the highest proportion of London landlords overall with one in five homes bought by an investor sold to a London landlord.
The data also shows that 9% homes in the North of England that are bought by an investor are sold to a landlord from London, up from 1% in 2010 while in London only 12% of homes sold in April were bought by an investor, close to a record low.
By buying outside of the capital London investors are significantly cutting their stamp duty bills. Landlords buying in London face an average £40,400 stamp duty bill compared to £6,300 for an investor buying outside of the capital.
The average stamp duty bill for an investor buying in London is now 73% more compared to pre-stamp duty changes but only 8% higher for an investor outside of London.
Johnny Morris, research director at Countrywide, said: “In response to slower price growth and government tax hikes, London landlords are looking further than ever to find a return.
“Lower entry costs and higher yields outside of the capital are enticing investors to look further afield than they have previously.
“Rental growth remains low across Britain. Mostly driven by London where rents have fallen for the sixth consecutive month.
“The repercussions of the stamp duty rush are still playing out in the rental market as stock levels continue to remain high. But with fewer investors buying in the capital we will likely see stock levels fall, driving future rental growth.”