Rental price inflation on new tenancies slowed for the seventh consecutive month in January, figures show.

HomeLet’s Rental Index found that rents in the UK rose by an average of just 0.7% in January, down from 1.7% in December and well below the 4.7% peak in June 2016.

Across the UK as a whole, the average rent for a new tenancy commencing in January was £888 per month, compared to £882 in January 2016. New rents in London are at £1,497, down 0.7% on December but up 0.4% year-on-year.

Martin Totty, chief executive of HomeLet, said: “Our data has been showing, for some time, that landlords do not feel able to raise rents on new tenancies at anything like the pace seen during 2015 and the first half of 2016.

“Now it is even possible that rents will begin falling, which would be unprecedented in recent times.

“Landlords and letting agents have clearly recognised concerns about the affordability of rising rents and are now being cautious about what they expect tenants to pay.

“However, with many landlords facing increasing costs in the months ahead, as the Government begins to cut back on mortgage interest tax relief, the sector faces a difficult balancing act.

“It remains to be seen if landlords feeling the pressure of tougher tax and regulation will be able to recoup these higher costs, as many in the industry had assumed.

“We see no sign of landlords panicking, and there is little prospect of an end to the long-term imbalance between supply and demand for residential property.

“Still, with economic uncertainty adding to the unpredictability of the short-term outlook, landlords and tenants alike will be monitoring the marketplace very closely.”