Inner London rents rose at a record 16.2%, recovering from a drop of 14% at the beginning of 2021 and getting just ahead of pre-pandemic levels for the first time.
Average asking rents hit an annual growth of 9.9% in Q4 2021, reaching £1,068 per calendar month (pcm) outside of London, the highest annual jump on record, according to the Rightmove Quarterly Rental Trends Tracker.
Wales (12.7%), the North West (12.5%) and the South West (11%) were at the forefront in annual asking rent growth, while London hit record annual growth of 10.9%, with asking rents in the capital reaching 3% higher than before the pandemic started.
Pontypool in Monmouthshire, Wales saw the largest annual increase in asking rent of any local area, rising 20% from £562 pcm to £674 pcm, followed by Ascot (18.8%), and Littlehampton (17.5%).
Inner London rents rose at a record 16.2%, recovering from a drop of 14% at the beginning of 2021 and getting just ahead of pre-pandemic levels for the first time.
The imbalance between high tenant demand and low rental stock led to competition for rental properties nearly doubling (94%) compared to the same period last year.
Total rental demand was up by 32% compared to this time last year, while the number of available rental properties was 51% lower.
This led to available rental properties being snapped up by tenants in 17 days on average.
However, the number of available rental properties was 7% higher than the same period a year earlier.
Flats saw the highest increase in competition compared to Q4 last year (132%), followed by terraced houses (40%) and semi-detached homes (30%).
Rightmove revealed that the average yield across Great Britain was 5.5%, the highest since 2016 (5.6%).
The North East and Wales hit record yields, while yields in London, South West and Yorkshire reached their highest since 2015.
Yields in the East of England and South East were at their highest since 2016.
Tim Bannister, director of property data at Rightmove, said: “2020 was defined by the race for space outside of cities, as tenant priorities changed and many moved further out looking for a larger property with green space, or temporarily moved back in with family.
"London was perhaps the biggest example of this, where landlords significantly decreased asking rents by the end of the year to encourage tenants to stay in the capital.
"A year on, asking rents have finally risen beyond pre-pandemic levels, a sign that the capital has not lost its pull and popularity with renters as landlords look to renegotiate previous cut-price terms.
“Tenant demand continues to be really high entering the new year, meaning the imbalance between supply and demand is set to continue until more choice comes onto the market for tenants, which has led to our prediction of a further 5% increase in average asking rents in 2022.
"Landlords understand the importance of having a good, long-term tenant, and there is a limit to what renters can afford to pay, which will prevent rents rising at the same rate we’ve seen over the past year.”
Marc von Grundherr, director of Benham and Reeves, added: “The London rental market is drastically different to that seen in 2020 when landlords were forced to heavily reduce asking rents to secure a tenant and avoid lengthy void periods due to an exodus of market activity from the capital.
“In fact, the surplus of available rental stock that accumulated due to the pandemic has now plummeted and this has been driven by a staggered return to the workplace and, in particular, a huge influx of demand from overseas students.
“We’ve also seen a huge increase in the number of tenancy renewals which have even exceeded 2019 levels and so while some areas are yet to see rental values return to the pre-pandemic norm, it’s only a matter of time as the market looks set to continue to this strong return to form throughout 2022.”
