Rents continue to rise, outpacing earnings for quite a while now
Growing faster than earnings for the last 21 months, rents now take up the highest proportion of earnings in a decade at 28.3%, according to a report from property listing platform Zoopla.
The average rent in the UK has risen to £1,126 a month in April, with rents in London as high as £2,000 a month.
The average UK rent has now increased by £110 a month, or 10.4%, since April 2022, marking the 15th consecutive month of double-digit growth in rental inflation.
Zoopla said this level of rental inflation is high by historical standards and ahead of average earnings growth, which is currently at 6.5%.
Rental affordability is currently at its worst in a decade for seven of the 12 regions of the UK
While renting in London is the worst in terms of affordability, with rents averaging around 40% of gross earnings, it is still below the peak of 43% reached in September 2015.
“Renters continue to face a relentless increase in rents, compounding wider cost-of-living pressures and making home moving decisions ever more challenging, especially for singles and those on lower incomes,” Richard Donnell, executive director at Zoopla, commented on the report findings.
“The chronic imbalance between supply and demand continues to push rents higher, but we expect increasingly stretched affordability will start to reduce the pace of rental growth into 2024.
“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 5 years. Some renters are experiencing more stress from higher rents with a jump in those finding the rent difficult to pay.”
Donnell said that while a proportion of landlords continued to sell, talk of an exodus was “overstated”.
“The real pressure of higher mortgage rates on landlords hits the 20 to 30% with the highest loan-to-value mortgages where landlords may need to inject extra capital when they refinance or look to sell,” he pointed out. “Half of all landlord sales are in London and the South East, where yields are lowest and the economics of being a landlord are toughest.”
Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, Twitter, and LinkedIn.
