Average monthly private rents lifted by 7% to £1,339 on average in the year to May, according to official data, down from 7.4% in April.
Across the nation, rents rose 7.1% to £1,394 in England, were up 8.5% to £799 in Wales, and were 4.5% higher to £999 in Scotland in the 12 months to May.
Tenant housing costs rose 7.7% to £848 in Northern Ireland in the period, the Office for National Statistics data shows.
The area with the highest annual private rent inflation in England was the North East, with a jump to 9.7%, while the lowest was in Yorkshire and The Humber, with a 3.7% rise.
London’s annual inflation was 7.7%, down from 8.4% in April.
The highest average rent by value was in London at £2,249, while the lowest was in the North East at £733 over the period.
Paragon Bank managing director of mortgages Louisa Sedgwick says: “Tenants will undoubtedly welcome the moderation of average monthly rents, but this remains elevated following the record high seen last quarter.
“The supply of privately rented homes continues to be below the levels seen before the pandemic and substantially outstripped by demand, a dynamic that will see rents continue to rise above the rate of inflation.
“The need for privately rented homes will be sustained by predicted population increases and changes to household formation, with more people choosing to live alone or remain in the sector for longer.
“For this reason, investment in stock must be encouraged and facilitated by favourable economic conditions and balanced regulation.”
Hampshire Trust Bank managing director -specialist mortgages & bridging Alex Upton points out: “[Rental] supply is still struggling to meet demand, and competition for well-located rental properties remains high.
“That pressure is unlikely to ease in the near term. New housing delivery may help, but even if government targets are met, it will take time for that stock to reach and influence the rental market. In the meantime, rental supply could contract further.
“Some landlords are reconsidering their position in light of the Renters’ Rights Bill and the likely cost of future retrofit requirements. It would not be surprising to see rental records continue to be broken this year.
“But where there is pressure, there is also change. Many professional landlords are already adjusting their strategy.
“We are seeing greater focus on resilient assets such as semi-commercial properties, houses in multiple occupation and refurbishment projects aimed at delivering long-term value.
“The most effective landlords are positioning their portfolios with the future in mind.”
Propertymark chief executive Nathan Emerson adds: “The private rental sector is facing much evolution across nearly all corners of the UK currently.
“We have the recent publication of the Housing (Scotland) Bill progressing through the final stages of the Scottish Parliament, and the Renters’ Rights Bill in England is also approaching its final stages in Westminster.
“These pieces of legislation will bring seismic change for those who rent and will represent some of the biggest differences within the rental market in decades.
“There has been much discussion and immense concern for many landlords, with considerable numbers contemplating selling their properties, with the potential to lessen supply even further.”
