The average rent has hit £1,078 a year – up 12% in a year – and double the rate of earnings growth, according to the latest Zoopla Rental Market Report.
Rents are now less affordable for single people than any time in past 10 years – accounting for 35% of renters income.
The stock of homes for rent is 38% below the 5-year average while tenant enquiries are 46% above the 5-year average.
As such renters are settling for smaller properties, with a rise in demand for one-bedroom flats.
Richard Donnell, Zoopla’s executive director, said: “Increasing investment in new rental supply from multiple sources is the main route to reducing rental growth and making for a more sustainable private rented sector.”
“It is important that policymakers encourage good landlords of all types and sizes to stay in the market and deliver much-needed supply.
“Only by increasing investment in the private rented sector can we ease the affordability pressures on renters in the medium term and make for a more sustainable rental market.”
Sarah Coles, senior personal finance analyst, Hargreaves Lansdown, added: “The rental property drought is driving rents sky high, rising at twice the rate of wage inflation, and swallowing an incredible 35% of the average single income. Landlords have been abandoning the market in droves, while tenants flock to it, leaving the rental market an arid wasteland, picked clean of properties.
“RICS has warned for months that landlords are selling up in huge numbers. New tenant rights and energy efficiency legislation will make living conditions better for renters, but they also mean that for many landlords the investment required means the numbers no longer add up.
“They’ve been selling out at market highs and cashing in their investment. The rise in mortgage rates was also tough on landlords, who need to cover their mortgage payments with room to spare in order to hit affordability rules, so this will also be forcing some of them out of business
“Meanwhile, the number of prospective tenants has boomed. Now, would-be buyers are swelling their ranks, as they wait to see what’s going to happen to the property market before taking the plunge. This not only means renters are staying put, but former homeowners are joining them, while they try to wait out market falls. There’s also a growing gulf between new rentals and renewed contracts – which are up a far more manageable 3.8%in a year. It means more renters deciding to stay in the same property, which makes life even more difficult for new tenants looking for a home.
“None of these trends look set to change in a hurry, so there’s a chance things will get even worse in the coming months. Renters will have to hope that falling house prices will persuade landlords that now isn’t the time to sell – despite what has happened to mortgage rates.
“The figures also show we’re seeing a reversal of some pandemic trends. There has been a boom in rents in big cities, which are enjoying a comeback after the pandemic exodus. Now more people are working from the office for at least part of the time, the reality of the commute is sending many tenants back to the city.
“Meanwhile, there has also been a rise in demand for one-bedroom properties. Unfortunately, this is less positive trend, because it’s largely the result of people being priced out of somewhere larger that may well have suited them better.”
