LSL Property Services figures revealed that the average rent in England and Wales dropped by 0.3% in January to £682 per month.
The average yield also fell slightly to 4.9% in January, as rents declined at a faster pace than rental property values.
Despite the drop, average rents remain 4% higher than a year ago, with signs of renewed growth in several regions.
LSL added that it was normal to see rent falls during December and January as fewer people move home around the festive season. Many landlords also reduce rents during these months to avoid having their properties empty.
David Brown, managing director of LSL Property Services, said: “The recent loosening in the buy-to-let mortgage market has boosted the supply of rental homes on the market, a crucial factor in the temporary drop in rents.
“With more products coming onto the market, there are signs that this trend will continue into 2011, allowing a growing number of professional landlords to get onto the market, or broaden their portfolios, and take advantage of near record rental income and strong tenant demand.”
He added: “International investors, too, have played their part, looking to place their cash in UK bricks and mortar while yields look attractive and properties are affordable.”
While some areas of the country saw steep falls in rent during January, the cost of being a tenant continued to rise in other regions.
Average rents rose by 0.9% in the East Midlands and 0.8% in both the West Midlands and Yorkshire and the Humber. London rents also edged up 0.2%.
However, rents fell 2.5% in East England and 2.1% and 1% in Wales and the North West respectively. There were also drops of 0.4% in the South West and South East.
Fewer tenants were late paying their rent in January, with 11% of all rent in the UK, totalling £258m, unpaid or late, compared to 11.7% in December (£276m).
