The average weekly rent in England Wales rose by 1.2% to £713 last month, surpassing the previous record high of £705, according to research.

The Buy-to-Let Index from LSL Property Services revealed the largest monthly increase since August 2010 as potential house buyers struggle in the face of high deposit demands and are forced to rent.

With annual rent inflation at 4%, the average rent is £27pcm higher than August 2010. The average rental yield for landlords hit 5.2% in August.

Rents increased fastest in Wales and the South East, up 2.1% in the month. The only regions which saw a month-on-month decreases were the West and East Midlands, with average rents falling 0.4 %.

London saw the largest annual growth according to the LSL, with rent up 6.6%. According to separate research by tenant referencing specialist HomeLet, the average rental price in Greater London increased to £1,202 in August, compared to £1,154 the previous month, despite continual economic instability.  This is an increase of 12.2% compared to the same time last year. This at a time when the average salary rose just 2.4 % in the same period. This large deficit in rental and salary increases indicates how London residents are feeling the squeeze.

In the last year, average rents have risen in all regions except Yorkshire and the Humber, where they have fallen 0.5%.

The total annual returns for rental properties - rental income minus or plus changes to the property value - improved in August after house price falls became less severe.

The average total annual return in August was 2.6%, the equivalent of £4,336. This breaks down as £7,626 of rent, with a capital loss of £3,290. If property values maintain the same trend as the last three months, a property investor could expect to make a total annual return of 10.5 % over the next 12 months, equivalent to £17,381 per property, LSL said.