Monthly rents increase £115 in a year as tenants seek smaller homes to keep bills down 


The average rent in the UK has increased by £115 per month since last year to reach £1,051, accounting for 34.4 per cent of the average income of a single earner. 

Rental growth has accelerated over the last 12 months – from less than 2 per cent in July 2021 to 12.3 per cent today, according to research from Zoopla.

This, coupled with rising energy bills, means that renters are increasingly seeking smaller homes to keep costs down, the property portal said.  

Supply squeeze: Current levels of available housing stock are around half the average for the last five years, with little prospect of a significant increase soon

It said the increases were down to a lack of homes to rent. Supply of rented properties is currently sitting at around half the average level for the past five years.

The average UK letting agent had just eight homes available to rent this summer – half the amount there was in the summers of 2017 to 2019, Zoopla said. 

The number of homes being advertised for rent is running seven per cent below the long-term average, as renters stay put to avoid rent increases. 

At the same time, private landlords continue to sell homes to reduce their portfolios in the face of tax and regulatory change.

Renters looking for smaller, cheaper homes 

These increases in rent, coupled with the cost of living crisis, have led to a decline in renters looking for two and three bed houses, as they are instead opting for one and two bed flats.

Facing increased energy costs, Zoopla said renters were looking for smaller properties which are more affordable to maintain.

Rise: The imbalance between supply and demand for rental properties is forcing up rents

Rise: The imbalance between supply and demand for rental properties is forcing up rents

Going up: New renters or those looking to move face a greater increase in their monthly housing cost than those staying put, putting extra pressure on the market

Going up: New renters or those looking to move face a greater increase in their monthly housing cost than those staying put, putting extra pressure on the market

However, around three in four renters will decide to stay in their current property, accepting rent increases at an average of four per cent. 

Zoopla said those moving to a new property would find their monthly rent 12.3 per cent higher on average.

Richard Donnell, executive director at Zoopla said: ‘Rents have surged ahead over the last year but there are signs that the pace of growth is peaking and set to slow into 2023. 

‘Renters are responding and looking for smaller, better value for money homes to rent with an eye on energy costs as much as rental levels.

Capital value: Rental growth in London has outstripped other areas of the country but there are signs the price inflation is levelling off

Capital value: Rental growth in London has outstripped other areas of the country but there are signs the price inflation is levelling off

‘What the rental market needs to combat these challenges is more new homes for rent. 

‘Greater regulation has seen less new investment and a small but growing number of landlords selling up, meaning the rental market has stopped growing since 2016.

‘Policymakers need to tread a careful path between protecting consumers and ensuring a decent supply of homes for rent.’

Rents rising in cities in reversal of pandemic trend 

The data also shows a reversal of the trend seen during the height of the Covid-19 pandemic. 

Rental growth in urban markets (10.5 per cent) is now outpacing that in rural markets (8.5 per cent) as strong employment growth drives demand in cities.

Rents are rising quickly across all parts of the UK, but there are regional differences. 

The North East has only seen a 7.6 per cent rise in rents, but they have soared by almost 18 per cent in London. While the annual growth rate has accelerated in the last year, it is starting to plateau.

Katinka Hill, regional lettings rirector at estate agent Chestertons, says: ‘London has long established itself as a hotspot for professionals which has always driven rental demand for one and two-bedroom flats or pieds-à-terre. 

‘As tenants are now facing added pressure from the cost of living crisis, we are witnessing an increase in enquiries for smaller apartments which is creating an even more competitive market for renters.’ 

Zoopla says their data indicates more headroom for above average rental growth in areas that currently have some of the lowest rents in the country. 

Furthermore, the company warns there is little prospect of a significantly improved rental supply in the near term as private landlords continue to sell off properties.

Best mortgage rates and how to find them

Mortgage rates have risen substantially as the Bank of England’s base rate has climbed rapidly.

If you are looking to buy your first home, move or remortgage, or are a buy-to-let landlord, it’s important to get good independent mortgage advice from a broker who can help you find the best deal. 

To help our readers find the best mortgage, This is Money has partnered with independent fee-free broker L&C.

Our mortgage calculator powered by L&C can let you filter deals to see which ones suit your home’s value and level of deposit.

You can also compare different mortgage fixed rate lengths, from two-year fixes, to five-year fixes and ten-year fixes, with monthly and total costs shown.

Use the tool at the link below to compare the best deals, factoring in both fees and rates. You can also start an application online in your own time and save it as you go along.

> Compare the best mortgage deals available now

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