Rental costs are rising in the east and south east of England as people search for more affordable properties outside the capital.
Your Move’s latest Buy-to-Let index revealed rents in the east of England grew by 5.6 per cent in the last 12 months to reach £868, while in the south east the typical rent increased 3.4 per cent year-on-year to £878.
London and the south west were the only two regions to witness a decline, with the average rental property in the capital let for £1,280 during February 2017 - 1 per cent less than at the same point a year ago.
The fastest growth was witnessed in Wales, where rents increased by 7.7 per cent in the year to February to reach £593 a month - significantly faster than the 12-month average of 1 per cent for England and Wales.
But while rents increased, yields dropped from 4.9 per cent to 4.1 per cent.
In London, the average yield was 3.2 per cent in February, down from 3.6 per cent a year ago but flat month-on-month.
The typical yield in the south east, meanwhile, was 3.4 per cent - down from 3.7 per cent in February 2016 - while in the east of England yields dropped from 4.4 per cent to 3.9 per cent in the same period.
Valerie Bannister, lettings director at Your Move, said: “The dramatic rent increases in London have now slowed as people look outside the capital in order to meet their housing aspirations.”
“Areas in the south east and east of England have traditionally offered much better value than the capital and this has tempted many Londoners to look further afield for rental properties.”
“Renters in London could be reaching the limits of their affordability as prices dropped back 1 per cent in the last year. This will be one to watch as the year progresses.
“Away from the capital, Wales saw the strongest outright performance. Rents across Wales increased by 7.7 per cent in the last year, more than anywhere else in the UK.”
Mike Richards, director at London-based Mortgage Concepts Associates, said: “Yields have been low in central London and the outskirts for a long time. I would definitely agree that we have reached an affordability ceiling.
“Whereas in the past you may have been able to get a 70 per cent to 75 per cent loan-to-value mortgage, now you are getting a 55 per cent to 60 per cent max, so people looking for buy-to-let are having to put a lot more money in.
“The problem is a lot of property would have been sold to investors but now they can’t get the loan-to-values that they need.
The government is trying to cool the market and get back into private ownership, so second or third-time buyers take buy-to-let properties and release theirs back to the first-time buyer - but with incomes not going up nearly as fast people still can’t afford it.