Landlords increased their rents for the sixth consecutive month during July as the availability of properties to let remained tight, research has indicated.

The average cost of letting a home rose by 0.5% during the month to £676, 2.3% higher than a year ago.

Average rents are now just £12 a month cheaper than when they hit their peak two years ago, before the market was flooded with properties being let by homeowners who had been unable to sell.

"Rents are still playing catch-up with the gains house prices made in the last year,” commented David Newnes of LSL Property Services. "The recovery in prices 12 months ago caused an exodus of accidental landlords from the market, ending the glut of supply of rental accommodation.

"Although house price rises have leveled off, landlords are still reaping the benefits of the constrained supply, and the improving yields have restored a healthier balance to the dynamics of property investment."

Rents are not expected to fall in the near future as expected interest rates increases will force many landlords to hike their rents to cover increasing mortgage costs.

On a positive note, the number of tenants who were late with their rent fell to its lowest level in July since 2008.

Overall, arrears accounted for only 9.2% of all rent across the UK, down from 11.2% at the beginning of the year.

The improvement in arrears levels has been attributed to the current tenant mix. Thousands of frustrated first-time buyers are being forced to rent for longer than they want to, but these tenants' finances are often in a better state and they are able to meet the increases in rents.