Renting is on average £270 per month more expensive than at the end of Covid according to figures released today by the online property guide Zoopla
However rents are rising at a slower rate with growing affordability pressures seeing then rise at their slowest rate since 2021.
Outside of London, rents are rising fastest in pockets outside major cities such as Rochdale (11.9 per cent) as well as Blackb
Zoopla predicts that rents will increase by 4 per cent over 2025, driven by faster rental growth in more affordable areas
The slowdown is down to a narrowing in the imbalance between supply and demand over 2024 and growing affordability pressures on renters in areas with high rents.
The annual cost of rent has increased from £12,000 in 2021 to £15,240, an increase of £3,240 (27 per cent) outpacing the growth in earnings (19 per cent) over the same period
With more renters than there are homes to rent, renters are seeking out the best value for money. This means the impetus for rental growth is being driven from markets with lower rental values and the lower end of the rental market in major cities.
Private landlords continue to sell off rented homes at a steady pace in the face of greater regulation and higher borrowing costs, despite what have been sizable increases in rents.
Despite this, Zoopla believes that the peak of the private landlord sell-off has now passed. It’s now a question of when market conditions look right for landlords to increase investment and expand rental supply. This is still some way off and requires lower base rates and higher rental yields.
One bright spot has been more corporate investment in new build rented homes – but even in these instances, the pace of new development has slowed in the face of higher borrowing costs and more regulation.
Zoopla expects a continued mismatch between supply and demand with average rents for new lets to increase by four per cent over 2025 taking the annual rental cost to £15,850. Rental growth in London and larger cities will lag behind the UK average as a result of growing affordability pressures and further modest growth in supply.
Commenting on the latest report, 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.
“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.”
