UK Rents Surge by £3,240 Annually for Newly Let Homes Since 2021.

Rents have increased by 27% since the conclusion of pandemic lockdowns, whereas incomes have grown by 19%.

The average expense associated with renting a newly available home in the UK has increased by £3,240 compared to the period following the pandemic lockdowns, following three years during which rental increases have surpassed growth in earnings, according to research findings.

Since 2021, rental prices have surged by 27%, as reported by the online property platform Zoopla, in contrast to a 19% rise in earnings. This has elevated the annual cost of renting a property to £15,240, up from £12,000 in 2021.

The escalation in rental prices commenced after the lifting of Covid lockdowns in 2021, leading to average private rents reaching unprecedented levels.

The primary factor attributed to the rise in housing costs is the significant demand for rental properties, which has greatly exceeded supply, resulting in heightened competition among prospective tenants.

Nevertheless, rental prices are currently increasing at their slowest pace in over three years, as tenants approach their financial limits regarding housing expenditures.

In the past year, rental costs for newly let properties have risen by 3.9%, marking the lowest growth rate since August 2021.

Furthermore, rental prices are experiencing a slower rate of increase in regions with elevated rental costs, such as London, where the annual growth rate has decreased to 1.3% from 8.7% in the previous year.

In contrast, areas with lower rental costs, like Northern Ireland, are witnessing significantly higher rental growth, with an increase of 10.5%, while the north-east of England is seeing a rise of 8.7%.

It is anticipated that average rental prices across the UK will increase by 4% in 2025; however, the growth in London and other major cities is expected to be less pronounced, with a more substantial rise occurring in the more affordable regions of the country.

The disparity between the supply and demand for rental properties, which has contributed to the escalation of rental prices in recent years, is beginning to diminish, according to findings from Zoopla.

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Richard Donnell, the executive director at Zoopla, stated: “The number of rented homes hasn’t grown since 2016, creating scarcity for renters at a time when demand has boomed on a strong labour market and the rising cost of home ownership.

“Rental growth has slowed but we expect an ongoing lack of rental supply to keep an upward pressure on rents.”

In recent years, there has been a significant rise in rental prices; however, private landlords have persistently divested their rental properties in response to increased regulation and elevated borrowing costs.

According to Zoopla, the peak of divestment by private landlords appears to have been reached, although it remains uncertain when market conditions will become attractive enough for landlords to resume investment and enhance the supply of rental properties.

Donnell stated that the government's goal to increase housebuilding represents the most effective strategy to alleviate the burden on renters by augmenting the availability of both private and social rental homes. Nonetheless, he emphasized the importance of encouraging private landlords to continue their participation in the market.

The rapid rise in rental prices, outpacing income growth, is placing a heavy burden on renters across the UK. With rents increasing by 27% since 2021, many tenants are struggling to keep up with the escalating costs, particularly as supply remains limited. While rental growth has slowed, it is still expected to continue increasing, particularly in more affordable regions, leaving many renters in financial strain.

The lack of new rental properties and the ongoing divestment by private landlords further exacerbate the issue, highlighting the urgent need for increased housing supply to relieve pressure on the rental market.

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