The cost of renting a home has climbed to its highest in a decade, with rents having risen faster than wages in every month for almost two years.
Moreover, renters are being told to brace for affordability to get even worse amid a shortage of homes to let, which likely will be compounded over the summer when typically demand jumps.
On average, rents in the UK are 10.4 per cent higher than they were at this time a year ago, according to data from Zoopla. The property search portal said a “chronic imbalance between supply and demand” was behind the spiralling costs, with those on lower incomes “bearing the brunt”.
Rental inflation has been in double digits for 15 straight months, while it has outpaced wage growth for 21 months.
The typical renter is now paying 28 per cent of their gross salary towards their rent, the highest proportion in a decade. In London, that percentage is up to 40 per cent, but that is less than the peak of 43 per cent in 2015.
“Renters continue to face a relentless increase in rents, compounding wider cost of living pressures and making decisions over home moving ever more challenging, especially for singles and those on lower incomes,” Richard Donnell, executive director at Zoopla, said.
“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.”
Zoopla expects the imbalance in supply and demand to continue over the summer and autumn, when the number of people looking for rental homes can rise by up to 40 per cent.
The lack of supply is also likely to remain a problem, with the number of homes to rent stuck at between 20 per cent and 40 per cent below pre-Covidc levels in most parts of the country. Much of that has been pinned on smaller landlords leaving the sector and Zoopla’s data shows a “steady flow landlords selling up”, although Donnell argued that “talk of [an] exodus is overdone”.
Just over half of all homes being sold by landlords are in London and southeast England, where rising interest rates have the biggest effect, given high prices and low rental yields. Zoopla expects rental inflation to drop to about 8 per cent by the end of this year as “growing unaffordability” takes its toll on what people can pay.
Cost of renting hits highest in a decade