Rents still booming - growth hits 13 year high according to Zoopla

The rental market continues to boom despite the growing cost of living crisis, with average rents rising at a 13 year high says Zoopla.

Typical rents across the UK are now nearing £1,000 pcm - £62 more than at the start of the pandemic - after an annual rise of 8.3 per cent in 2021. 

The portal says that households who agree new lets are now having to pay an additional average annual cost of £744, compared to the start of the pandemic in March 2020. 

This increase means that a single earner can now expect to spend 37 per cent of their gross income on rent, which is up from 34 per cent during most of 2021. However, this now brings the figure broadly back in line with the longer term average of 36 per cent as rental growth rises in line with wage growth.

Even with the current sharp rise, the overall increase in UK rents over the last five years totals 12 per cent thanks to the decline in rents seen in some areas during the pandemic. 

Zoopla says the New Year has seen heightened demand for rental properties, up 76 per cent compared to the New Year markets between 2018 and 2021. 

Yet the supply of rental properties recorded in January 2022 in the UK is 39 per cent below levels typically observed at the start of the year. This is creating competition in the market,  with the imbalance of supply and demand ultimately spurring rental growth. 

As a result, properties are being snapped up. In London, this means renters are having to move quickly to secure the perfect property with the time to let now averaging a fortnight, down from three weeks in late 2020. 

Zoopla suggests that this shrinking stock of homes for rent can be attributed to a continued decrease in buy to let investment over the last five years. 

As rents rise, more renters will be choosing to stay in their properties, limiting stock turnover. With supply squeezed, it’s likely that continued demand will underpin more modest rental growth in the coming months, especially in city centres. However, as the spike in demand falls back - hampered by the increases in household costs - it will reduce pressure on supply, ultimately driving more local competition to attract renters in local markets.