Average private rents in Britain have soared to record highs, with severe shortages of properties resulting in more tenants paying above the asking price and stretched budgets forcing more people to downsize to studio flats, data shows.
The average advertised rent in Greater London is 16.1% higher than a year ago, which is the highest rate of growth of any region on record, according to the property website Rightmove.
However, the site also revealed that some cities and towns have faced even bigger annual rises, piling yet more pressure on households already facing severe strain.
In Newbury in Berkshire, advertised rents have jumped by 22.2% over the past year, while in Manchester the annual increase was 20.5%. In Cardiff it was 19.6%, Edinburgh 18%, and in Birmingham the figure was 17.6% .
The rise in housing costs has been blamed largely on demand for rental properties greatly outstripping supply, leading to intense competition among tenants.
Rightmove warned that the soaring cost of new mortgages triggered by September’s botched mini-budget could worsen the situation, as some would-be first-time buyers who could no longer afford the property they wanted, or who were keen to wait for calmer conditions before proceeding, may decide to stay renting for longer.
Separate research by iPlace Global, a property technology company, found that 16% of landlords were aiming to sell their buy-to-let property because of rising costs, which could further reduce the supply of rental homes.
Rightmove said the typical advertised private rent outside London had risen to a new record of £1,162 per calendar month, while the equivalent figure in the capital was double that at £2,343.
“There are simply not enough homes available to rent to meet the demand from people inquiring,” said Tim Bannister, the site’s director of property science.
Tenant demand was up by 20% compared with last year, while the total number of available properties to rent was down by 9%.
Studio flats have overtaken one-bedroom properties as the most in-demand flat type for renters, with agents suggesting that a combination of stretched finances and the returning popularity of city centre living were contributing to this shift.
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Unfortunately for those who are willing to shrink their housing aspirations, competition between tenants for available studios is 71% higher than it was last year.
Rightmove’s data showed there were four times as many tenants looking for a studio flat as there were studios available.
Tim Hassell, the managing director of Draker Lettings in London, said within a few hours of a rental property coming on to the market, “we are receiving dozens of inquiries which, when compared with the pre-Covid market, is extreme. Previously we would receive between five to 10 inquiries in the first 48 hours, and now we are receiving 30-40 in the same timeframe.”
He added: “This has also resulted in multiple offers from tenants who are competing by paying over the asking price and offering significant funds upfront.”