Tenant finances received a welcome boost as rents fell in January for the third consecutive month, according to the latest Buy-to-Let Index from LSL Property Services plc. The average rent in England and Wales fell by 0.3% in January to £732 per month, as January saw a monthly dip for the fourth time in five years. Although the rate of decrease slowed to a third of that previously reported in December, average rents are now at their lowest level since July 2012.

Despite the seasonal fall, the LSL data shows that rents in January 2013 were 2.8% higher than a year ago, a climb of £20 per month. Six regions saw rents decrease on a monthly basis, compared to seven in December. The largest fall was in the South East where rents dropped 1.5%, followed by Yorkshire & the Humber with a 0.9% monthly fall. Four regions saw rents rise on a monthly basis. The fastest was in the East Midlands, where rents posted 1.2% growth, followed by the West Midlands with a 0.9% rise.

On an annual basis, rents in London saw the fastest growth, rising by 5.2% - an increase of £54 per month. The South East saw the next biggest annual rise, with rents 3.5% higher than last January. The sharpest annual falls were in Yorkshire & the Humber and the West Midlands – where rents are 0.6% and 0.3% below levels seen a year ago.

David Brown, commercial director of LSL Property Services, said: “An improving mortgage market in January helped take a little pressure off the limited supply of rental property, at a time when the demand from tenants on the move is far from its seasonal peaks. But the dip in competition is not likely to last long. The pace of the fall in monthly rents has slowed, and we’re already seeing tenant activity pick up. The private rented sector is coiled for a spring bounce, and without a sudden widening in the supply of accommodation, rents are likely to resume their climb in fairly short order.”