Rents rose to a new record high in July as rents rose for the fourth month in a row, according to the latest monthly Buy-to-Let Index from LSL Property Services plc.

The average rent in England and Wales in July rose by 1% to £725 per month, surpassing the previous high of £720 pcm in October 2011 while the pace of annual rental inflation has also increased, climbing to 2.9% from the 2.4% recorded in June.

On a monthly basis, rents rose in eight out of ten regions in England and Wales. Rents in the South East climbed the fastest, increasing by 2.2%. The West Midlands saw the next largest increase, rising by 1.8%. Rents dropped by 0.4% in both the South West and the East of England. London rents hit a new high for the third consecutive month, following a monthly 1% rise to £1,057.

Rents fell on an annual basis in just two regions, decreasing by 1.2% in the South West, and by 0.4% in the East Midlands. The steep monthly increase in rents in the South East increased annual rent inflation to 4% in July. However, rents are still rising fastest on an annual basis in London, with rents in the capital climbing by 4.8%, compared to 4% in June.

David Brown, commercial director of LSL Property Services said: “The backlog of frustrated first-time buyers in the private rented sector showed no sign of clearing in July - in fact, it is still growing. As lending to those without substantial deposits remains depressed, demand for rented accommodation can only go one way in the long-term, providing further upwards momentum for rents.

“The rental market is also entering its summer peak, as recent graduates and those with new jobs begin to look for new accommodation. With more tenants on the move, alongside long-term underlying demand, fierce competition for properties is enabling landlords to increase rental prices to new highs.”