Tenants struggle as average rents climb 11% to £1,162

Average rental asking prices outside London hit a new high of £1,162 a month in the third quarter of this year, jumping 3.2 per cent from the previous three month period and 11 per cent in the past year, according to Rightmove.

It is only the third time on record that rents have climbed by more than 3 per cent in a quarter. Rents climbed even faster in the second quarter of this year, rising 3.5 per cent over the three month period. 

Inside London, the typical rent is now £2,343 – an increase of 3.8 per cent in the last three months and 16.1 per cent in a year.

Demand for rental properties outweighs supply across the country, although outside of the capital the number of properties available to let has risen 9 per cent. However, in the same period demand increased 20 per cent.

Rightmove said the pace of growth was being driven by the severe shortage of available rental properties, combined with extremely high demand which continues to surpass last year’s levels in every region of the UK.

The rise in rental prices puts additional pressure on renters amid a backdrop of a worsening cost of living crisis. In September inflation rose back up to the 40-year high of 10.1 per cent, pushed up in part by food costs which climbed 14.6 per cent in the 12 months to September.

Rightmove’s director of property science Tim Bannister said: ‘It’s a real challenge for renters at the moment, as there are simply not enough homes available to rent to meet the demand from people enquiring.

‘We will need a significant addition of homes to come onto the market to even begin to balance the scales. Those looking to rent a smaller property in the next few months may find that they face some added competition from would-be first-time buyers, who have had their purchase plans scuppered for now due to the sudden rise in mortgage interest rates, and are now looking to rent.’

Citizens Advice, a non-profit providing free financial advice, has reported a significant rise in the number of people it has helped with homeless issues this year. 

By the end of September the organisation had helped more people with a homelessness issue than it had by the same point in the previous three years.

Given increases in rents, the confirmation last week from outgoing prime minister Liz Truss that the Government is keeping its pledge to abolish the right of landlords to issue no faults evictions was welcomed by many.

Osama Bhutta, director of campaigns at the housing charity Shelter, greeted the news at the time saying: ‘Private renting is completely broken – anything less than wholesale reform won’t give private renters the security and stability they need. 

‘Now the Government must also stay true to its word to ban discrimination against low-income families and ensure privately rented homes are decent and safe.’

However, Liz Truss’s shock resignation on Thursday leaves the country facing another leadership election and it is unclear which policies will survive under the next administration. She had also confirmed that she intended to drop the Conservative manifesto commitment to build 300,000 homes a year by the mid-2020s.

In September, Shelter revealed that one in seven renters saw their rent increase in August. Furthermore the data highlighted that one in three (2.6 million adults) are spending at least half their household income on rent, while almost 2.5 million renters are either behind or constantly struggling to pay their rent – a figure which has increased by 45 per cent since April 2022.

Renters forced into smaller homes to save money 

The charity has highlighted the plight of Andrew, 38, who lives in a one-bedroom flat near Brighton with his partner and shares custody of his children from his previous marriage.  

He works full time as an engineer. Recently his landlord put his rent up by £155 a month, £100 more than he says they had agreed, making it unaffordable and forcing him to move.

‘With my budget I could only afford a one-bedroom flat in the area, so when my children stay each weekend I sleep on the sofa, my partner sleeps on a camp bed, and the kids sleep in our bed and a bunkbed in the bedroom,’ he says.

The trend towards downsizing to save money is reflected in the Rightmove data, which that shows studio flats have overtaken one-beds as the most in-demand flat type for renters. 

Agents suggest stretched budgets and the returning popularity of city centres are contributing to the shift.

There are now four times as many tenants looking for a studio flat as there are studio flats available, a 71 per cent increase on a year ago.

Regionally, the South West Yorkshire & The Humber, and Wales have seen the most new properties come onto the market, with the numbers in each rising 19 percent, 12 per cent and 10 per cent respectively. 

In London, average asking rents have risen to a record of £2,343 per month, according to Rightmove. This puts the annual rate of asking rent growth in the capital at 16.1 per cent, the highest yearly rate of growth of any region on record.

Separate data from housing developer Pocket Living shows that over a quarter of renters in London (27 per cent) are considering leaving the city next year due to the cost of living crisis.

Over half (54 per cent) of the renters considering making the move out of the capital say they don’t want to leave but feel they have no choice.