Analysis by Zoopla found that despite the increase in mortgage rates seen in recent years, average monthly rents for new lets are £1,283, 11% higher than mortgage repayments, which currently sit at £1,154.
Rent rises accelerated in 2022 and 2023 due to a surge in rental demand in the wake of the pandemic, supported by a strong labour market and higher levels of migration for work and study. Meanwhile, the spike in mortgage rates locked many potential first-time buyers out of homeownership, forcing them to remain in the rental sector and placing even more pressure on the supply of available private homes for rent.
Regional rent growth exceeds 30%
The average percentage rise in rents for new lets over the last three years is 21%, but some postal areas around the UK have recorded a much higher pace of growth.
Oldham, Wigan, Bolton, Falkirk, Walsall and Wolverhampton all recorded rent rises of 30% or more per month over the last three years. However, these areas still have lower-than-average monthly rents – the highest of which is Wolverhampton at £911.
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Slough, Romford and Ilford experienced rises of 26%, 28% and 28% respectively, pushing their monthly rents well over the national average, ranging from £1,599 to £1,794.
Furthermore, adding to renters’ woes, more than 40% of landlords said they planned to increase rents in response to measures due to be introduced by the Renters’ Rights Bill, adding £74 per month to tenants’ costs, according to a recent lender survey.
Richard Donnell, executive director at Zoopla, said: “Renters have faced steep increases in the cost of renting in recent years, with rents pushed higher on strong demand and the limited supply of homes for rent, which has hit lower-income renters hardest.
“Rental inflation for new lets has slowed to its lowest rate for four years, which will be welcome news for Britain’s private renters. The quickest way to alleviate high rents is to grow the stock of homes for rent in both the social and private rented sectors. Growing housing supply is a key government target and it’s vital that the stock of rented homes is expanded across all tenures.”
