Average rental price for a new tenancy in the UK was £953 per calendar month in January which is a year-on-year increase of 2.3%, the HomeLet Rental Index has shown.
Rents in London increased by yearly by 2.5%, with the average rent in the capital now standing at £1,627 a month.
This is 71% higher than the UK average.
These figures are higher than the rate of inflation which was recorded at 1.8% in the Consumer Prices Index in December.
Rents in the North West are growing faster than any other region in the UK, whilst London rental growth has decreased over the past three months.
Neil Cobbold, chief sales officer at PayProp, said: “The latest figures show the market resurgence seen in the sales market has extended to the rental sector.
“There was strong annual growth across most regions in January when compared with the same month last year, with impressive growth of over 5% in the North West, Wales, Scotland and the East Midlands.
“However, there were some regional dips last month when compared with December 2019.
“This could be due to the impact of the general election wearing off.
“The decisive election result may have pushed some tenants – that were delaying their move – into action.
“This could have inflated average rents in December due to higher competition for properties.
“This heightened activity may have levelled out, but the generally secure market conditions will be welcomed by letting agencies and landlords.
“There remain some bumps in the road to contend with, including changes to Capital Gains Tax, the final reduction of buy-to-let mortgage interest tax relief and the impact of CMP reform and the Tenant Fees Act throughout 2020.
“Knowing that rents are growing with increases above 5% in some areas will reassure landlords and agents that demand for rental property remains stable as they negotiate a market landscape which continues to evolve.
“Looking forward to the next few weeks and months, there is nothing to suggest rental market prices won’t remain steady with annual growth continuing to rise.”