Renters are paying £270 more per month than they were three years ago, according to new figures from Zoopla.
The average annual rent is now £15,240, an increase of £3,240 compared to three years ago, the property portal said.
This means the typical tenant has seen a 27 per cent rise in rent from November 2021 – outstripping a 19 per cent increase in income over the same period.
Richard Donnell, chief executive of Zoopla, said: ‘Independent tenants moving into homes have seen rents rise at a faster rate than incomes over the past three years.
‘The number of rental properties has not increased since 2016, as there has been uncertainty for tenants at a time when demand has increased due to a strong labor market and rising costs of ownership. home
‘Aspirations to expand housebuilding are important because the fastest way to ease the burden on renters is to increase the supply of private and social rental homes.
‘Landlords will continue to have a significant role and incentive to remain in the market.’
Slow but still rising: Zoopla predicts rents will increase by 4% by 2025, driven by faster rental growth in higher-priced areas.
Are rents going through the roof?
The nearly two-year increases recorded over the past three years in rates appear to have reached a ceiling.
Rents were 3.9 percent higher than last year, the slowest rate of growth since August 2021 and down from 9.1 percent a year ago.
The slowdown is down to a slight imbalance between supply and demand by 2024.
Demand from tenants is down by almost a third compared to this time last year, but the number of rental properties on the market has increased by 12 per cent.
Increasing cost burdens on renters in areas with high rents are keeping a lid on the ever-increasing costs.
That’s why London recorded the biggest slowdown, with average prices 1.3 percent higher than last year, down from highs of 8.7 percent a year ago, according to Zoopla.
London also has the highest rents, at £2,190 per month which is 70 per cent higher than the UK average.
Adam Jennings, head of rentals at Chestertons, says that on top of prices reaching record highs, they have seen an increase in people leaving the private rental sector and on the property ladder.
‘In recent years, London rents have reached all-time highs as more and more tenants are unable to buy due to high property prices in London and the height. mortgage rates.
‘And now interest rates has fallen and turned to stamp duty is just around the corner, and homeowners will be more motivated to get on the property ladder.
‘As a result, the London rental market is recovering and providing better conditions for remaining renters.’
Where are rents still running high?
In the most expensive regions of the UK rents continue to record significant increases.
Rents have risen 10.5 per cent year-on-year in Northern Ireland and 8.7 per cent in the East of England.
These two areas have the lowest rents of £801p/m and £732p/m.
Outside of London, prices are rising the fastest in pockets outside the capital cities such as Rochdale, 11.9 per cent, Blackburn, 10 per cent) and Birkenhead which rose 9 per cent.
Much of this reflects rental growth as renters seek better value for money in urban areas.
In some places it’s all about giving to meet the need.
For example, rental growth in Nottingham has stopped. It’s the only city that has seen an increase in the number of homes available for rent last year, giving renters more options.
As a result, rents will remain unchanged from last year, having risen 10.4 percent last year.
What’s next for the rental market in 2025?
Although more homes are available than a year ago, the number of homes for rent remains below pre-pandemic levels in all regions apart from the East Midlands.
Zoopla said the landowners Rent-to-own homes will continue to be sold on a regulatory basis with higher mortgage payments, despite significant increases in rents.
However, Zoopla believes that the peak of landlord sales has passed.
Now it’s a question of when market conditions will be favorable for landlords to increase investment and expand rental supply. This is still a long way off, requiring lower base rates and higher rental yields.
One bright spot has been more corporate investment in new rental housing – but even in these circumstances, the pace of new development has slowed due to high debt and many other issues. law.
Zoopla expects the gap between supply and demand to continue and rents for new leases will increase by four per cent by 2025 when the average annual rent will reach £15,850.
Rental growth in London and the suburbs will lag behind the UK average due to rising cost pressures and low supply growth.
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