The average rent has reached a record high outside of London, averaging £1,162 per calendar month in the three months between July and September.
Rental prices in London had its biggest ever annual increase, rising by 16.1% to an average of £2,343 a month over the period, according to an analysis of 357,061 rents advertised on Rightmove, the property website.
Nationally, rents rose 3% in the three-month period for only the third time on record.
Everywhere in the UK had an increase in the number of available rental properties except London where there was a 24% decrease in the number of available rental properties.
Meanwhile, demand for rental properties in the UK increased by 20% compared to last year while the number of properties available to rent fell by 9%.
As a result, competition for property is “extreme”, said Tim Hassell, director at Draker Lettings in London.
“Within hours of a property going live, we receive dozens of inquiries which, compared to the pre-covid market, are extreme.
“In the past we would get between 5-10 inquiries in the first 48 hours and now we get 30-40 in the same time frame. This has also resulted in multiple offers from tenants who are competing by paying above asking price and offering significant money upfront.”
The regions with the largest number of new rental properties were the South West (up 19%), Yorkshire and The Humber (up 12%) and Wales (up 10%).
The analysis suggested that first-time buyers may want to extend their lease rather than buy a property, increasing demand for rental properties.
Why is the UK rental market in chaos?
Renting is a cheaper option than home ownership for first-time buyers due to rising mortgage costs: The average monthly mortgage payment for a new first-time buyer putting down a 10% deposit is now a fifth (20%) more than the rental payment for the same type of property, Rightmove said- the analysis.
Rightmove’s head of property science Tim Bannister said: “Those looking to rent a smaller property in the coming months may find they face further competition from would-be first-time buyers, who have had their purchase plans put on hold due to the sudden rise in mortgage rates, and now I’m thinking on rent.”
As the pressure on the cost of living increases, tenants have wanted to downsize and the demand for smaller properties has increased.
In particular, demand for studio apartments increased from July to September.
There were four times as many renters looking for a studio apartment as there are studio apartments available, a 71% increase from a year ago, the data showed.
City centers proved popular.
John O’Malley, managing director at Pacitti Jones in Glasgow, said: “The dramatic increase in the cost of living means we are now starting to see older people downsizing to flats to reduce household bills – and being centrally located will also reduce travel expenses. And this is something we expect to see more of.”