Monthly rents have increased by £221 to £1,283 over the past three years on average and are now 11% higher than the average repayment mortgage, which rose by £218pcm to £1,154pcm, according to Zoopla.

This means rents have now been running consistently ahead of mortgage costs for the past five years.

Surge in demand

Zoopla says this widening gap is down to a surge in demand in the wake of the pandemic.

Also, a strong labour market and higher levels of migration for work and study have added to that demand.

And when mortgage rates spiked during 2022 and 2023, it made it harder to buy homes, with many first-time buyers remaining in the rental market for longer, further boosting demand and exerting yet more upward pressure on rents.

At the same time, robust growth in average earnings has supported the rises in average rents, although private renters on lower incomes and those relying on state support have faced a far greater squeeze on their living costs from rents.

Rises slowing

Zoopla adds, though, that rental inflation for new lets is now running at its lowest rate for four years as demand has weakened on the back of lower levels of migration for work and study, improvements in mortgage accessibility for first-time buyers and increasingly stretched affordability.

However, barriers to home ownership mean that there is still strong demand for rental homes, where the stock levels have remained static for almost a decade due to low investment by landlords, and so rents are likely to continue rising, albeit at a slower pace.

The quickest way to alleviate high rents is to grow the stock of homes for rent in both the social and private rented sectors.”

Zoopla boss Richard Donnell says renters have faced “a steep increase in the cost of renting in recent years, with rents pushed higher on strong demand and limited supply of homes for rent, which has hit lower income renters hardest.

“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’s vital that the stock of rented homes is expanded across all tenures.”

We need Government acknowledgement of the importance that the private rented sector plays in housing the nation.”

Nathan Emerson, CEO of Propertymark, says: “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.”