However, despite the monthly decline, average rents increased 4% in 2011 and total annual returns for landlords increased to 3.7%.
The impact of Christmas spending drove up rental arrears, with 10.7% of all rent late or unpaid in December.
On a monthly basis, rents fell in seven regions, with the biggest declines in the South East and North East, where they fell by 1.9% and 1.4% respectively.
Rents in London fell for the first time since December 2010, with rents falling by 0.9%, compared to a drop of 2.3% a year ago.
In the past 12 months rents have risen in all but two regions. The fastest rising rents on an annual basis were in London where rents rose by 5.6%. The next biggest increases were in the East and South East of England, with rents rising 5% in both regions.
Rents fell in the North East and South West by 1.3% and 1.2% respectively.
David Brown, commercial director of LSL Property Services said: “The seasonal relief continued for tenants as rents dipped again in December, but the drop-off was much smaller than a year ago.
“The rental market was sheltered from the full impact of the seasonal lull by the strength of underlying tenant demand as many prospective renters took the opportunity to move in the run-up to Christmas at a time when the market is traditionally less competitive.
“With the mortgage market facing challenges from the eurozone crisis and the sluggish wider economy, credit conditions are unlikely to ease significantly in the coming year. As a result, the number of first-time buyers able to secure finance isn’t about to rocket up, and demand for the limited supply of rental accommodation will continue to rise. It won’t be long before rents will resume their upward march.”
