0:01 AM, 12th December 2024, About 4 hours ago
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The cost of renting a home has surged since the Covid lockdowns, rising from £12,000 annually in 2021 to £15,240 this year – a 27% increase.
However, rising rent has outpaced the growth in earnings, which stood at 19% over the same period.
The data comes from Zoopla’s latest Quarterly Rental Market Report which highlights that the rate of rent growth has slowed to its lowest level in more than three years.
It’s now at 3.9%, down from 9.1% a year ago.
Despite big rent increases, Zoopla says that landlords are continuing to sell off properties due to increased regulation and higher borrowing costs.
The platform suggests that the peak of this sell-off has passed.
Richard Donnell, executive director at Zoopla, said: “Private renters moving home have faced rents rising faster than earnings over the last three years.
“The number of rented homes hasn’t grown since 2016 creating scarcity for renters at a time when demand has boomed on a strong labour market and the rising cost of home ownership.
“Rental growth has slowed but we expect an ongoing lack of rental supply to keep an upward pressure on rents.”
He added: “The ambitions to expand home building are important as the quickest way to ease the pressure on renters is to boost the supply of private and social rented homes.
“Private landlords will continue to play an important role and should be encouraged to remain in the market.”
The report indicates that the slowdown in rent inflation is due to a narrowing gap between supply and demand throughout 2024.
Plus, the growing affordability pressures in high-rent areas has had an effect.
Rent inflation has fallen across all regions except Northern Ireland, where rents are rising from a low base.
The slowdown is most pronounced in London with average rents increasing by just 1.3% over the past year, compared to 8.7% previously.
The capital also has the highest average rents in the UK, at £2,190 per month, which is 70% higher than the national average.
Rents are climbing fastest in Northern Ireland (10.5%) and the North East (8.7%) which also have the lowest average rents of £801 and £732, respectively.
And since renters are increasingly seeking value for money, they are driving rent growth in lower-cost markets in major cities.
In outer London, rents have risen by 3-6% in more affordable areas, led by Havering (5.9%) and Barking and Dagenham (5.2%).
In contrast, inner London areas have seen minimal growth, with Tower Hamlets (0.3%), Greenwich (0.5%), and Kensington & Chelsea (0.8%) experiencing the smallest increases.
Outside London, the fastest rent rises are in areas like Rochdale (11.9%), Blackburn (10%), Birkenhead (9%), Burnley (8.9%) and Newcastle (8.7%).
Zoopla says this trend reflects ‘catch-up’ growth as renters look for better value in and around major cities.
Local demand and supply patterns significantly influence rent changes.
For example, Nottingham has seen rent growth stall, with rents remaining unchanged from last year, down from a 10.4% increase previously, due to a rise in rental home supply.
Propertymark’s president, Angharad Trueman, said: “Whilst it is encouraging for renters to see price rises starting to slow down, plus data showing the gap between supply and demand starting to narrow too, there is still much work that needs to be done to ensure that the private rental sector can deliver stability for both landlords and tenants.
“This ideally should include revisiting tax structures and regulations that are deterring long term investment in the private rental market.
“It is vital there is robust provision that helps ensure the supply of rental homes grows in line with predicted increases in demand.”
