Rents are £417 a month higher than five years ago

Rents have surged to a new high, with tenants now paying an average of £417 more per month, a 44% rise that outstrips the 36% growth in average earnings since the onset of the pandemic in 2020.

The figures from Rightmove show that outside London, the average advertised rent for new properties has climbed to £1,365, marking a 1.2% quarterly increase.

In the capital, rents have hit a 15th consecutive record, reaching £2,712, up by 0.5% this quarter.

Another new rent record

Rightmove’s property expert, Colleen Babcock, said: “Despite another new record in average asking rents for tenants, the big picture is that yearly rent increases continue to slow, which is good news for tenants.

“Supply and demand is slowly rebalancing towards more normal levels, though we still have a way to go before we reach pre-2020 levels of available homes for tenants.”

She added: “The good news is that the latest industry snapshot suggests more investors are taking out buy to let loans compared with last year, which should help to bring even more homes to the rental market.”

Rent inflation slowing

Rightmove says much of the rent spike occurred during the intense market activity of 2021 and 2022, but recent trends suggest a slowdown in rent price growth.

The PRS is now showing signs of rebalancing, with the best supply and demand equilibrium since 2020.

The number of available rental properties has increased by 15% compared to last year, with the North East seeing a notable 33% rise.

However, supply remains 29% below 2019 levels.

Tenant demand is falling

The research also points to tenant demand softening, dropping by 10% from last year, resulting in fewer enquiries per property.

On average, a rental home now receives 11 enquiries, down from 16 last year but up from seven in 2019.

Increased investment in the buy to let sector is further supporting supply growth.

According to UK Finance, BTL loans have risen by 17% this year, with a 28% increase in loans for new rental property purchases to boost supply.

Landlords are also seeing longer letting times and more frequent rent reductions.

It now takes an average of 25 days for a rental property to be marked as let agreed on Rightmove, compared to 21 days last year and 18 days during the 2022 pandemic.

Landlords need government support

The president of ARLA Propertymark, Megan Eighteen, said: “Many landlords within the private rental market are grappling with substantial hikes in their overall costs, including increased taxes, unfavourable mortgage rates and ongoing regulatory challenges.

“These factors are making property investment less appealing and potentially riskier.

“Consequently, this is exacerbating the disparity between supply and demand for housing, and we’ve seen a significant impact on rental prices, which vary regionally.”

She added: “It is clear to see that many landlords may now be struggling to justify their current or future property investments, especially if costs and the number of regulations continue to rise.

“It is crucial for all governments across the UK to recognise the vital role the private rented sector plays in accommodating the nation’s housing needs and provide urgent support to enhance the supply of homes while effectively lowering rent levels in the long term.”