Buy to let rents are rising slower than the cost of living, says a new study by leading letting agents.
Tenants paid 1.5% more to rent a buy to let in December than 12 months earlier, according to research by LSL Property Services.
The average buy to let rent in England and Wales was £745 a month, said analysis from the firm that runs letting chains Reed Rains and Your Move.
The rise was less than half that for the year ending December 2012, which was 3.2%, and below the average inflation rate for the year.
Consumer Price Index (CPI) inflation ended the year at 2%, reported the Office of National Statistics, while the Retail Price Index (RPI) was 2.7%.
The RPI includes living costs, while the CPI excludes them.
The firm also revealed the number of new tenancies was up 7.7%, but well below the November level of 12.7%. The difference is put down to renters not wanting to move over the holiday season.
David Brown, the firm’s commercial director, said: “Households have suffered the most painful recession in living memory, but it’s clear we’re now coming out the other side.
“By investing heavily in more homes to rent, landlords have played a pivotal role. Now it remains for the rest of the economy to lift real earnings to raise more households out of trouble.
“The prospects look good. Early indications show wage expectations are looking up and inflation is under control. If this can take hold, more prosperous tenants will make for a more prosperous private rented sector in 2014.”
Average rents may have risen across England and Wales, but the figure differs between regions.
London tenants were paying 4% more – the cash equivalent is £44 – but renters in Eastern England, the West Midlands and Yorkshire all paid less.
Gross yields on a typical buy to let home remained steady at 5.3% in December, level with the previous quarter.