Renters are being pushed towards smaller properties and lower running costs in the face of higher rents and rising living costs including rising energy prices, according to Zoopla’s latest quarterly Rental Market Report.
Zoopla says that the average rent has increased by £115 per month since last year, reaching £1,051 per calendar month - and accounting for 34.4% of the average income of a single earner. This surge in rents is heavily impacted by a severe supply and demand imbalance with the stock of homes available to rent standing at just half of the five-year average - while the average letting agent currently has just eight homes available to rent.
This chronic supply shortage is also impacted by an increase in renters staying put in their properties to avoid rent hikes and landlords continuing to sell properties in the face of tax and regulatory changes. Currently, approximately 3 in 4 renters will decide to stay in their current property and although they will experience lower levels of rental growth of 4% or less - this will squeeze supply in the market as a result.
There’s been an acceleration in demand for 1-bed and 2-bed flats as renters feel the cost-of-living squeeze, and fewer renters looking for 2-bed and 3-bed houses. Outside of London, the average asking rent is £105 lower per month for a 2-bed flat compared to a 3-bed house.