Rents across the UK rose by an annual average of 3% in October, according to HomeLet.

It noted that a tenant signing up for a new tenancy during October agreed to pay an average monthly rent of £902, compared to October 2015’s average of £875.

This suggests that the pace of inflation in the UK’s rental market has started to slow because, as recently as March this year, rents were rising at an average annual rate of 4.5%.

Martin Totty, HomeLet’s chief executive officer, said: “Landlords are aware of the need to find a balance between what tenants can afford and the returns they require on their investment. While many landlords are facing higher costs themselves, including the impact of higher stamp duty on their property purchases since April, our data suggests that they have so far been cautious against a more uncertain economic environment.

“We know wage growth has lagged rental price inflation and it could be that we are approaching an affordability ceiling whereby landlords can’t attract tenants able to afford higher rents.”

Regional trends

The contraction in the pace of rental price inflation is most marked in areas of the country where rents were previously rising most quickly. In Greater London, rents on new tenancies rose by 2.5% over the year to October, having been increasing at a rate of more than 7% a year ago.

In the broader South-East region, rents rose at 2.7% on an annualised basis last month, down from above 4.3% this time last year.