The cost of renting hit a record high of £734 a month in August after five consecutive months of rising prices.
Average rents in England and Wales rose by 1.2% compared with the previous month, according statistics from LSL Property Services.
The average cost of renting is now 2.9% higher than it was 12 months ago, causing rents to rise to record highs in five regions of the country.
London tenants have been worse hit, with rent rising at a rate of 4.9% since August 2011.
Meanwhile, renters in the South East have seen price rising at a rate of 3.9% during the same period.
Wales and the South West are the only two regions where rents have fallen in the past year.
David Brown, commercial director of LSL Property Services, says: "The rental market is right in the thick of its peak season, and the demand from graduates and those starting new jobs has added a new layer of competition on top of the existing pool of frustrated buyers."
He adds that "some relief for tenants may be found if the Funding for Lending scheme begins to feed through into greater lending to borrowers with smaller deposits".
The scheme may help more people getting onto the first rung, effectively easing the demand for rental properties.