The report noted an “acceleration in demand” for one and two-bed flats, with fewer renters looking for two and three-bed houses.
According to Zoopla, the “chronic” shortage of rental properties is contributing to the rate at which rents are rising, with the stock of homes available to rent crashing to half of the five-year average.
Zoopla found that the average rent has grown by £115 per month since last year, reaching £1,051. As a result, rent now accounts for more than a third of the typical income of a single earner.
The combination of a lack of supply and the growth in rents is resulting in more tenants opting to stay put in their current homes. The study found that around three quarters of renters plan to stay in their existing property so long as their rents go up by four per cent or less.
Regional rents are rising
Overall rental growth has jumped from less than two per cent in July 2021 to 12.3 per cent today, according to Zoopla’s report, which pointed out that rental growth is outpacing increases in earnings in every region of the UK.
London has seen the biggest rise at 17.8 per cent, followed by Manchester (15.5 per cent), Glasgow (14.4 per cent) and Bristol (12.9 per cent). Rents were also found to be rising more quickly at the top end of the market compared with the lower end, where Zoopla suggested demand is likely to be more price sensitive.
Is rental growth peaking?
Richard Donnell (pictured), executive director at Zoopla, said that there were signs that the pace of rental growth is peaking, and will then slow into 2023, noting that renters are looking for “smaller, better value for money homes”.
He continued: “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.
“There is a risk that more regulation to improve standards or potential new measures to dampen rental growth, as proposed in Scotland, may compound the supply problem which is pushing rents up in the first place. Policymakers need to tread a careful path between protecting consumers and ensuring a decent supply of homes for rent.”
Hannah Gretton, national lettings director at LSL, said that the high levels of demand for rental properties meant that quality homes were being snapped up “within hours of hitting the market”.
She continued: “On average, we are seeing double figures of enquiries per property with a one-bedroom property in Manchester last week receiving over 100 requests to view, highlighting just how busy our branches are and the challenges renters face when it comes to finding an appropriate property.”
