Your Move’s latest England & Wales Rental Tracker showed average prices in the South West and the East Midlands rose by 3% in the year to May to £682 and £656 a month respectively.
Across all regions, the average seasonally adjusted monthly rent now stands at £861.
London prices continue to fall
London remains the most expensive place to rent in England and Wales. The average property in the capital now lets for £1,273 a month.
While prices in London have fallen year-on-year, other regions have seen greater price falls. In Wales the average rent charged is down 2% and now stands at £587, while in the North East the average property costs £536 following a fall of 1.6%.
Wales, the North East and London were the only regions to post an annual fall.
The London data, however, continues to mask differences in prices across the capital. For example, a property located in the London Travelcard Zone 2 costs an average of £1,492 a month while a property in Zone 5, much further from the centre of the city, costs £1,079.
Yields squeezed in Wales and North West
Landlords in Wales saw their average yield fall from 4.7% to 4.6% this month, while those in the North West saw a drop from 4.9% to 4.8%. Investors in the remaining seven regions all saw their returns stay the same in May. Northern regions continue to offer the highest percentage returns.
In the North East the average landlord enjoyed a return of 5% on their investment, while in the North West it was 4.8%.
This compares to just 3.2% in London, although as prices in the capital tend to be much higher, the absolute return can often be more than other regions.
Across all of England and Wales, landlords enjoyed an average yield of 4.17% this month.
Fall in number of struggling tenants
The financial situation of tenants improved this month as there was a drop in the number of households in arrears.
Your Move reported that 9.2% of all tenancies were behind with their payments this month, lower than the 9.4% recorded in April. This fall is the first this year, although the arrears rate has been close to the 9% mark through 2018 so far.
Encouragingly, the proportion of tenants in arrears remains well below both the recent and all-time high recorded by Your Move.
The all-time high of 14.6% was recorded in February 2010 while the most recent high of 13.7% was found in July 2017.
Martyn Alderton, national lettings director at Your Move, said: “Landlords will be encouraged to see strong rent growth and solid yields in most areas of England and Wales. However, for renters the East Midlands and South West have seen prices grow faster than anywhere else in the UK.
“Meanwhile landlords in most of the nine regions surveyed have seen their returns remain steady this month, contrasting the recent declines we have seen.”