The East Midlands saw residential rents grow by 2.24%, according to the latest Landbay Rental Index.
The region had the fastest rise of any UK region in the 12 months to February and more than three times the UK average of 0.69%.
On a national basis, Leicester (3.42%) and Nottingham (3.30%) experienced the most substantial rental growth in the region – both overtaking UK inflation which currently stands at 3%.
“Much like Britain’s weather, rental growth was heavily impacted by the East in February,” John Goodall, chief executive officer and founder of Landbay, said. “With its more affordable rents, the East is seemingly becoming an increasingly attractive buy-to-let region and as a result greater competition is driving up rents.”
There were disparities in rental growth within property sizes in the East Midlands. Rental growth in Leicester, for example, was driven by one-bed and three-bed properties, with rents for both having increased by 4.03% and 5.01% respectively.
In contrast, rent for a two-bed grew by just 1.41% year-on-year, pointing to an oversupply of two-bed properties in Leicester.
Goodall continued: “Landlords hoping to capitalise on high demand in the East should pay close attention to the number of bedrooms in the property before making their purchase. Demand for two-bed homes appears to be severely lagging other sizes.”
The East of England saw the second fastest pace of rental growth (1.58%). Within the region, Peterborough (2.99%) and Cambridgeshire (2.24%) also experienced considerable growth, while Luton rents fell by -0.13%, despite having been among the fastest-growing towns at this point last year.
Renting in both the East Midlands (£626) and East of England (£910) remains more affordable than the average across the UK, which now stands at £1,199 per month – a 0.69% increase on this time last year.
London rents remain, on average, 2.5 times greater than those across the rest of the UK (£1,878 vs £761), while rents in the South East (£1,053) also surpass the average.
Goodall predicts the rise in rents is likely to continue into 2018. He said: “The Prime Minister has this week vowed to get tough with property developers who sit on planning permissions, but if we truly want to control rental and house price growth we need to build more homes, not just plan them.”
He added: “Areas in the East Midlands and East of England, such as Leicester and Nottingham, where rental growth is reaching particularly unsustainable levels, should be the prioritised focus of the government, developers and landlords.”