Rents recorded their largest monthly increase in a year during August, says the latest buy-to-let index from LSL Property Services.

In August, the average rent in England and Wales rose by 1.2% to £713 per month, which is £27 higher than in August 2010.

On a monthly basis, rents increased fastest in Wales and the South East, where they rose by 2.1%.

The next biggest increases were in London and the South West England, with rises of 1.5% and 1.3% respectively.

In the last year, London has seen stronger rental inflation than other regions of England and Wales as rents hit a new record high of £1,025 a month in August, up by 6.6% or £63 a month during the past year.

David Newnes, estate agency managing director of LSL Property Services, said: "We are in the thick of the busiest time of year for the rental market, and red-hot demand for properties is driving rents up at their fastest monthly pace in the last 12 months.

"Recent graduates moving for their first jobs exaggerate the long-term and growing demand from frustrated buyers.

"In the last two years, average rents have risen by more than £50 a month.

"With a big rise in the number of hopeful buyers able to get a mortgage unlikely in the foreseeable future, competition for rental accommodation will not drop and further rent rises remain on the cards."