Private renters in the UK have seen a larger increase in their monthly housing costs since 2022 than mortgaged homeowners, new analysis from Zoopla reveals.
According to the latest data, the average rent for a new let now stands at £1,283 per month, compared to the average mortgage repayment of £1,154 per month for an outstanding loan.
Since 2022, higher mortgage rates have added £218 to the average monthly repayment on outstanding mortgages, but this has been narrowly surpassed by the £221 per month increase in average rents for new lets.
The surge in rental costs comes amid rapidly growing demand for rented homes in 2022 and 2023, while the supply of private rented properties has remained largely static due to limited new investment from landlords.
Some local areas have experienced particularly sharp rent increases over the past three years, as demand continues to outstrip supply. In Oldham, Wigan and Bolton, rents have risen by over 31% since 2022.
London continues to have the highest average rents in the country, with outer London locations seeing the most significant monetary increases. In Ilford, rents are now £1,794 per month – up 28% over three years, equating to an additional £395 per month.
However, the pace of rental inflation for new lets is now at its lowest level for four years, as rental demand moderates from recent highs. Factors contributing to this include lower levels of migration for work and study, as well as improving conditions in the mortgage market for first-time buyers. Zoopla notes that affordability pressures are also acting as a brake on further rent increases.
The mortgage market, by contrast, has remained resilient to higher rates, supported by stricter regulations introduced since 2015. As a result, mortgage borrowers are generally able to manage higher repayments, and unlike renters, are gradually paying down the principal of their loans.
Despite some easing in rental growth, the continued imbalance between supply and demand is keeping upward pressure on rents. The stock of homes for rent has remained almost unchanged for a decade, with little sign of a significant increase in investment from landlords.
Richard Donnell, executive director at Zoopla, said: “Rental inflation for new lets has slowed to its lowest rate for four years which will be welcome news for Britain’s private renters. The quickest way to alleviate high rents is to grow the stock of homes for rent in both the social and private rented sectors.
“Growing housing supply is a key government target and it is vital that the stock of rented homes is expanded across all tenures.”
Nathan Emerson, CEO of Propertymark, commented: “Many landlords in the private rented sector have faced significant increases to their overall costs, with tax hikes, mortgage rises, as well as continuous regulatory hurdles, which are ultimately making investment less attractive and potentially more risky. This has played a key factor in rent rises, as well as worsening the gap in supply and demand levels.
“Nearly half of all landlords only own one property, showing that many will be unable to justify their current or future investments if costs and regulations continue to increase. We need government acknowledgement of the importance that the private rented sector plays in housing the nation and urgent support to boost the supply of homes and crucially, bring down rent levels long term.”
