The buy to let lender also warned that rental prices were in danger of soaring over the coming decades without appropriate interventions.
According to its National Rent Review, the average rent paid for a UK property has grown by 0.53% in 2017 so far.
However, this masks a significant divide with rents in London falling 0.83% compared to resilient growth of 1.27% elsewhere. (Click to expand graph below)
This was highlighted in November where national rents slipped by 0.01%, the first time rental growth has entered negative territory in at least half a decade.
The average UK rent has now plateaued at a record £1,196 per month, up from £1,190 at the turn of year.
But despite the narrowing gap, London rents remain, on average, 2.5 times greater than those across the rest of the UK – £1,871 compared to £759.
London has now seen 18 consecutive months of falling rents with drops in 26 of the 33 London boroughs – a trend which has now begun to hit the South East.
Danger of soaring rents
Landbay CEO and founder John Goodall noted in the report that the regulatory changes in 2017 had encouraged greater professionalisation of the sector and many landlords have taken steps to limit tax exposure by setting up as limited companies.
“Overall, 2017 has been a year of transition for the buy to let market, albeit underlined by the relative stability of the UK rental population,” he said.
“Tenant demand shows no sign of letting up, and buying a home remains a pipe dream for most young people, suggesting that the rental market can only grow in importance over the coming months and years.”
He added that with interest rates now rising and the Term Funding Scheme coming to an end in February, “we expect upward rental pressure to be just around the corner”.
“Without a radical house building plan for purchase as well as purpose-built rental properties, rental prices are in danger of soaring over the coming decades.”