Rents on new tenancies rose across most parts of the UK over the three months to May, led by gains in Scotland, fresh figures show.
The latest data from the HomeLet Rental Index reveals that the cost of a new tenancy in the private rentals market in the UK, excluding Greater London, rose by 4.4% in the three months to May 2016 compared with the corresponding period 12 months earlier.
Although the latest figures represent a fall from the 5.1% rise witnessed over the three months to January, rents on new tenancies continue to rise at a much faster rate than inflation across most parts of the country.
According to the Index, rental prices rose in almost every area of the country, with 11 out of the 12 regions surveyed seeing an increase over the three months to the end of May.
Rental price growth in the UK was led by Scotland, where rents rose by 10.6% year-on-year, followed by gains of 8.3% in the East Midlands. London's rental market, where the average rent on a new tenancy is now £1,563, up 6.2%, also continues to see rents increase more quickly than in most other areas of the country.
The North West of England was the only region to see rents fall, down 1.9% year-on-year.
The May data from the HomeLet Rental Index will provide some encouragement for both landlords and tenants.
Many tenants will undoubtedly be please to see the rate of rental price growth slow, while the data suggests landlords continue to enjoy healthy rental yields after costs despite a sharp rise in the supply of rental property in May, following a rush to complete buy-to-let property purchases before higher rates of stamp duty came into force at the start of April.
Martin Totty (pictured), Chief Executive of Barbon Insurance Group, HomeLet's parent company, said: "The May HomeLet Rental Index continues to show a rental market characterised by steady growth in rents, as the number of tenants looking for property runs ahead of the supply in the market - that remains the picture in most regions of the country. While this growth has begun to slow, which tenants will welcome, landlords will also be encouraged by the vote of confidence in the sector evidenced by the increase in buy-to-let completions in the past few months."
The slowing of the pace of rent rises in May is likely to be part of a broader story about economic uncertainty ahead of this month's referendum on the UK's membership of the European Union, according to Totty.
He added: "Across the housing market, it may be that uncertainty ahead of this month's European Union referendum vote is a factor - some people may even be choosing to rent rather than buy given the unpredictability of the outcome and its impact; as we saw at the time of the 2008 financial crisis, house prices and rents are not immune from wider economic shocks.
"However, looking beyond shorter-term factors, net population growth and the rising rate of employment remain the key demand-side drivers for residential property; they look set to continue to run ahead of public and private sector initiatives to increase supply and keep pace."
Rental figures from the May 2016 HomeLet Rental Index
Average rent 3 months to May 2016
Average rent 3 months to April 2016
Average rent 3 months to May 2015
Yorks & Humber
UK ex Greater London