Annual rental growth is now 12.3%, according to Zoopla’s latest UK Rental Market Report, outpacing earnings growth in all regions and countries of the UK.

The property portal said that average rents have risen by £115 a month over the last year to £1,051.

Rents are rising quickly across all parts of the UK, ranging from 7.6% in the North East to almost 18% in London, said Zoopla.

Supply shortages

Rents are being pushed up by the severe and chronic undersupply of homes to rent, according to the report.

Zoopla said the rental market faces an imbalance of supply and demand that has led to a surge in rents. The stock of homes for rent remains almost half the average compared to the last five years. The average letting agent has just eight homes available to rent – half that of the summers 2017-2019.

At the same time, private landlords continue to sell their homes in the face of significant tax and regulatory changes.

Richard Donnell, executive director of research at Zoopla, said: “The chronic shortage of homes for rent and strong demand is pushing rents higher. Renters are adapting their strategies and starting to seek out smaller homes at lower rents and running costs.”

Demand for two-bed flats has risen, which Zoopla pointed out is being re-enforced by rising energy
costs, with the gas needed to heat a purpose-built flat 40% lower than that for a three-bed house.

It added that the chronic undersupply of rental homes shows no sign of changing, which means that rents are expected to continue to grow at above average rates into 2023.