Letting agencies Your Move and Reeds Rains claim rents have started to drop in many areas following the arrival of a glut of buy to let homes on the market after the passing of the stamp duty surcharge deadline.
Average rents for homes to let across England and Wales in May stand at £792 per month - a drop of 0.2 per cent since April and compared to a long-term average monthly rise of 0.4 per cent every May since the recession.
On an annual basis, rents are now 1.8 per cent higher than in May 2015.
That’s just half the annual rate of rental growth seen at the start of 2016, when in January this measure stood at 3.6 per cent.
“This is the equivalent of a flash flood for the rental market. Landlords escaping a much larger stamp duty bill by completing their purchases before April 1 have now finished their repairs and paperwork, with these homes to let competing for tenants in May and into June. That short-term mismatch has made May an exceptional month” says the agencies’ spokesman, Adrian Gill.
Rent rises in London have slowed to just 1.0 per cent over the 12 months ending May 2016. This compares to a peak seen in September 2015 when rents in London were 11.6 per cent higher than a year before at the time.
By contrast, the East Midlands have witnessed rent rises of 7.3 per cent over the 12 months ending in May, followed by the West Midlands with 5.5 per cent and the East of England with 3.6 per cent.
All 10 regions of England and Wales have seen rents in May higher than a year earlier, but the smallest rises - just 0.5 per cent over 12 months - were in Wales and the South East.
Taking into account both rental income and capital growth - but before property-specific costs such as maintenance - the average existing landlord in England and Wales has seen total returns of 10.2 per cent over the 12 months to May.