Residential rents in the East Midlands grew by 2.24% in the 12 months to February, the fastest rise of any UK region and more than three times the UK average of 0.69%.
The Landbay Rental Index, powered by MIAC, found at a county level that Leicester (3.42%) and Nottingham (3.30%) have experienced the most substantial rental growth in the region. Both outstrip UK inflation which currently stands at 3%.
There is a lot of variation in rental growth within property sizes in the East Midlands. In Leicester rental growth is driven by one-bedroom and three-bedroom properties, with rents for these properties increasing by 4.03% and 5.01% respectively.
In contrast, a two-bedroom properties grew by just 1.41% year on year, pointing to a glut of them in Leicester.
John Goodall, chief executive and founder of Landbay said: “Much like Britain’s weather, rental growth was heavily impacted by the East in February.
“With its more affordable rents, the East is seemingly becoming an increasingly attractive buy-to-let region and as a result greater competition is driving up rents.
“Landlords hoping to capitalise on high demand in the East should pay close attention to the number of bedrooms in the property before making their purchase. Demand for two-bedroom homes appears to be severely lagging other sizes.”
The region with the second fastest pace of rental growth is the East of England, where rents grew by more than twice the UK average (1.58%).
Within the region, Peterborough (2.99%) and Cambridgeshire (2.24%) both saw considerable growth. But Luton saw rents fall by -0.13%, having been among the fastest growing counties at this point last year (4.83%).
Even with the rapid growth, renting remains more affordable in both the East Midlands (£626) and East of England (£910) than the average across the UK.
The average UK rent now stands at £1,199 per month, a 0.69% increase on this time last year. London rents remain, on average, 2.5 times greater than those across the rest of the UK (£1,878 vs £761), while rents in the South East (£1,053) also well surpass the average.
Goodall added: “At a national level, an uplift in rents has been on the cards for a while and is likely to continue into 2018.
“The Prime Minister has this week vowed to get tough with property developers who sit on planning permissions, but if we truly want to control rental and house price growth we need to build more homes, not just plan them.
“Areas in the East Midlands and East of England, such as Leicester and Nottingham, where rental growth is reaching particularly unsustainable levels, should be the prioritised focus for the government, developers and landlords.”