Rent growth continued to slow in August

Helen Cahill
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Rent increases are not as dramatic as they used to be (Source: Getty)

Rents kept on an upwards climb in August, but the pace of rent growth is slowing.

In August, prices grew by 3.1 per cent year-on-year, according to HomeLet's rental index. Tenants signing new agreements paid an average £913 a month.

Read more: Here's where private rents are increasing fastest (and it's not London)

But this increase compares to annual inflation of between 3.5 per cent and 3.8 per cent for the last four months - and this time last year, year-on-year growth was nearly six per cent.

The slow-down was most apparent in London and the South East, and the dip correlates with the stamp duty tax changes that came into effect at the beginning of April, HomeLet said.

"Landlords are engaged in a delicate balancing act," Martin Totty, Barbon Insurance Group's chief executive said. "They're acutely aware of tenants' concerns about affordability while also conscious of the need to achieve their target yields against a backdrop of rising costs."

Read more: Leave the buy to let market alone, Britain needs more landlords

"August's figures suggest that rents are continuing to rise at a sustainable pace - ahead of price inflation, but well below house price increases."

In the coming months, rents would be driven by the continuing growth in demand for rental properties as high house prices prevent many from getting on the housing ladder.

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