Rents edge above long term ratio to earnings says Zoo...

Typical UK rents now account for 28.3 per cent of average pre-tax earnings - slightly above the 10-year average of 27 per cent.

The data, from Zoopla, says London is the most expensive of all regions, requiring an average 40 per cent of gross earnings - although this is below the 43 per cent proportion reached in September 2015.

However, rental affordability is currently at its worst for a decade in seven of the 12 regions of the UK according to the portal.

Annual rental growth in cities is highest in Edinburgh (13.7 per cent), then Manchester (13 per cent), Glasgow (12.3 per cent) and Southampton (10.7 per cent).

But the portal cautions that rents will only decrease if there is a significant increase in supply, or a drop in demand - both deemed unlikely in the very short term as July-to-September is typically the busiest season for lettings.

Supply remains some 20 to 40 per cent below pre-pandemic levels in most regions and Zoopla warns that to compound the problems the impact of higher mortgage rates will take a few months to feed through.

Zoopla claims that while some private landlords have exited the sector, the growth of Build To Rent means that on balance there has been no change in the number of privately rented homes since 2016. Currently, 10 per cent of homes for sale on Zoopla are formerly buy to lets.

Zoopla executive director Richard Donnell says: “The chronic imbalance between supply and demand continues to push rents higher but we expect increasingly stretched affordability will start to reduce the pace of rental growth into 2024.

“While there is concern over the impact of higher mortgage rates on those with mortgages, renters have already seen a £2,820 a year increase in rental costs over the last five years. Some renters are experiencing more stress from higher rents with a jump in those finding the rent difficult to pay.

“A proportion of landlords continue to sell but talk of an exodus is overstated. The real pressure of higher mortgage rates on landlords hits the 20 to 30 per cent with the highest loan to value mortgages where landlords may need to inject extra capital when they refinance or look to sell.

“Half of all landlord sales are in London and the South East where yields are lowest and the economics of being a landlord are toughest.”