Rent prices hit record-high levels with costs up 20% in some areas

The average cost of renting a home in the UK has hit a record high, with prices skyrocketing by more than 20 per cent in some areas, according to new figures.

Monthly rent is now an average of 11.8 per cent higher than a year earlier for properties advertised outside of London, and is nearly 20 per cent – or £177 – higher than at the start of the pandemic, statistics from Rightmove show.

In the capital itself, the picture for renters is even starker, with average monthly rents soaring to an eye-watering record high of £2,257, following a rise of 15.8 per cent described by the property website as “the highest ever annual rate of any region”.

Coming as the country grapples with a cost of living crisis and 40-year high inflation, these runaway rent increases are due to a shortage of available rental stock against a backdrop of rising demand, creating fierce competition between tenants, Rightmove said.

While June saw the largest number of new rental listings arrive on the market so far this year, with a rise of 8 per cent in six months, the available rental stock in the UK is still down by 26 per cent compared to last year – as demand has risen by 6 per cent.

The most recent quarter saw the second-largest rise in asking prices in the past decade, over which period rental prices have risen by 40 per cent compared with a 13 per cent rise in mortgage payments for the same properties.

Rightmove has now revised its price forecast for the coming months to reflect its expectations of an 8 per cent rise in asking rents by the end of the year, up from 5 per cent.

In what it described as a sign of confidence in the market, Rightmove said a third of landlords it surveyed were intending to expand their property portfolios in the coming year, while just over one in 10 planned to reduce the number of homes they rent out – a trend which can only exacerbate efforts to alleviate the housing crisis.

“The story of the rental market continues to be one of high tenant demand but not enough available homes to meet that demand,” said the firm’s director of property science, Tim Bannister. “Last year, we saw exceptional numbers of tenants looking to move and this year we have seen no let-up in this trend.

“Whilst stock levels are beginning to improve, with June seeing the highest number of new rental listings coming to market so far this year, the wide gap that has been created between supply and demand over the last two years will take time to narrow.

“Until then, this imbalance will continue to support asking rent growth.”

The largest annual rise came in Manchester, where the cost of renting a home soared by 23.4 per cent.

Prices also rose by 21.4 per cent in Chatham, Kent, by more than 19 per cent in Liverpool and Torquay, and by more than 16 per cent in Margate, Farnham and Birmingham.

The “sharp” rental price increases seen in Birmingham city centre in the past quarter are “a hangover of the stifled growth throughout the pandemic”, according to Nicola Fleet-Milne, chief executive of at FleetMilne, a letting agent based in the city.

“Couple this with a lack of good quality stock, and the result is an applicant base looking for homes six to 10 weeks in advance of their need,” she added.

“Older stock is falling dramatically behind the standards of the new units coming through, and whilst initially they may demand similar rents, as more developments complete, the older stock may be relegated to a markedly lower price band.”

Growth in the number of tenants enquiring about properties has continued through the most recent quarter, as well as the number of tenants extending their rental agreements, said Richard Davies, the managing director of Chestertons estate agency.

“Those who secured a property at a discounted rental rate during the pandemic are keen to hold on to this deal as long as possible, particularly in the face of rising living costs,” he said.

With the return of office workers, international students and corporate tenants alike, the rental market in London is seeing demand outstripping supply, Mr Davies said, adding: “This has created an extremely competitive market for tenants where many offer landlords over asking price in order to secure a property.”

Additional reporting by PA