The average rent in England and Wales fell by 0.3% in January to £732 per month as January saw a monthly drop for the fourth time in five years.
Rents are now at the lowest level since July 2012.
David Brown, commercial director of LSL Property Services, said: “An improving mortgage market in January helped take a little pressure off the limited supply of rental property, at a time when the demand from tenants on the move is far from its seasonal peaks.
“But the dip in competition is not likely to last long. The pace of the fall in monthly rents has slowed and we’re already seeing tenant activity pick up.
“The private rented sector is coiled for a spring bounce, and without a sudden widening in the supply of accommodation, rents are likely to resume their climb in fairly short order.”
Six regions saw rents decrease on a monthly basis in January compared to seven in December.
The largest fall was in the South East where rents dropped 1.5%, followed by Yorkshire & the Humber with a 0.9% monthly fall.
Four regions saw rents rise on a monthly basis. The largest was in the East Midlands where rents increased by 1.2% followed by the West Midlands which saw a 0.9% rise.
On an annual basis rents in London saw the fastest growth rising by 5.2% – an increase of £54 per month.
The South East saw the next biggest annual rise with rents 3.5% higher than last January.
The largest annual falls were in Yorkshire & the Humber and the West Midlands where rents are 0.6% and 0.3% below levels seen a year ago.
The total annual return on a rental property stood at 5.7% in January. This represents an average return of £9,369 with rental income of £7,840 and a capital gain of £1,529.
Despite the seasonal drop in rents the average yield on a rental property was 5.3% in January compared to 5.2% a year ago.