The data from the latest analysis report from lettings agency Countrywide also shows that one and two bedroom properties saw the greatest increase in rent up 8.5% and 3.6% to £751 and £810 respectively.
While three bedroom properties recorded a 1.6% increase to £930, however, four bedroom plus properties experienced a 3% decrease to £1,345 per calendar month.
On a regional basis Greater London had he largest annual increase in rent, up 10.6% to £1,265, followed by Wales up 6.1% to £666 and the South West up 4.1% to £765.
The only region to see a decrease in rent year on year was the South East, down 4.1% to £1,035 and the firm said that was due to a fall in demand for rental accommodation in the region as more tenants move out of the private rented sector and into the owner occupier sector.
A breakdown of the figures shows that the average rent for newly let properties was £883, an increase of 2.8%. In this sector one and two bedroom properties saw the largest growth in rents year on year, increasing 3.3% and 1.9% respectively
Renewed tenancies averaged £835 per calendar month with one bedroom properties in this sector recording the greatest annual increase in rent with a rise of 3.3%, followed by two bedroom properties up 1.9% and three bedroom properties up 1.7% to £875. Four bedroom plus homes saw rents stay broadly the same with just a 0.2% decrease.
The majority of UK regions saw an increase in rent for renewed tenancies in January 2015. Scotland sees the greatest increase up 5% year on year to £634, followed by Greater London, up 4.7% to £1,110 and the Midlands with a 3% increase to £622.
Some regions see a decrease in rents, most notably the North of England with a decline of 1.2% to £599, followed by Wales down 0.7% to £592 and the South East down 0.5% to £1,010.
Year on year average rents have increased for all property sizes with the smaller properties leading the way. One bedroom properties see the greatest increase in rent up 2.7% to £688, followed by three bedroom properties up 2.2% to £875, two bedroom properties up 1.9% to £768 and four bedroom plus properties up 1.3% to £1,328.
The data also shows that arrears have decreased year on year in all regions apart from the North of England where they have stayed the same, and central London where there has been a marginal increase of 0.6%.
‘Renting is a flexible and relatively hassle free way of living which suits many people's lifestyles. It allows them to settle in a location where perhaps they couldn’t afford to buy but they enjoy living in. With a growing population of lifetime renters, increasing the amount of good quality, affordable rental accommodation is needed to meet this demand,’ said Nick Dunning, Countrywide group commercial director.
‘With banks making it easier for landlords to offer longer tenancies and with more competitive buy to let mortgage products available, now is an ideal time for landlords to expand their portfolios and provide a more diverse range of affordable rental properties throughout the UK, not just in London and the South East as many would expect,’ he added.