The highest rental growth since the Global Financial Crisis, coupled with the cost of living crisis, is putting increased pressure on renters according to Zoopla.
Average UK annual rental growth has reached a 14 year high of 11 per cent with rents increasing to £995 in the first quarter of 2022.
This represents an increase of £88 a month compared to the start of the pandemic and follows a strong bounce back from last year, when average UK rents were down by more than one per cent, despite wage growth peaking at 8.8 per cent last summer.
Zoopla says that for renters, this has led to a significant increase in the proportion of gross income spent on rent, particularly in London where it has risen to a significant 52 per cent for a single earner - a level not seen since March 2020.
This falls to 26 per cent for sharers and means that a new let agreed for an average rental property in London will cost more than £20,000 in rent over the next 12 months - putting significant pressure on renters already dealing with the backdrop of the cost of living crisis.
In the UK as a whole, the average rent now accounts for over a third of gross income for a single earner. Around a third of renters live alone, according to the English Housing Survey.
There’s also been a strong bounce back in rental growth in London from falls of 10 per cent seen last year. Average annual rental growth in the capital rose to 15 per cent at the end of Q1 - driven by demand for flats from students, office workers and international demand.
Demand for rental property continues to outpace supply across the country, pushing up rents, although the rate of rental growth will slow through the second half of the year
The portal’s market snapshot suggests that the rental market remains highly localised, with the most affordable rental markets for dual earners located in more rural areas including Great Yarmouth in the East of England, South Somerset in the South West and North East Lincolnshire in Yorkshire & the Humber.
In these markets, average rents account for up to just 15 per cent of joint gross income.
In London, Bromley is the most affordable rental market, where average rents account for 19 per cent of joint gross income.
In the North West, Copeland, a local authority on the edge of the Lake District, encompassing the towns of Whitehaven and Cleator Moor is the most affordable rental market.
Gráinne Gilmore, head of research at Zoopla, comments: “UK rental growth is being driven by high rental demand and limited supply, trends that are more pronounced in city centres.
“The surge of post-pandemic pent-up rental demand will normalise through Q2 and Q3 however, which means rental growth levels will start to ease.
“Affordability considerations will also start to put a limit on further rental growth although this may occur at different times depending on location.
“Rents are likely to continue rising for longer in areas which have the most constrained stock levels - currently London, Scotland and the South West.”
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