Rental unaffordability for single earners has hit the highest level for over a decade, the property portal Zoopla has reported.
And its latest Rental Market Report concludes the rise in unaffordability shows no sign of slowing.
The average rent for a new letting has increased by £117 per month since last year, reaching £1,078 per calendar month, according to Zoopla. This equates to 35 per cent of the average income of a single earner.
Zoopla blames the situation on a ‘chronic demand and supply imbalance’. The stock of homes for rent is down 38 per cent in comparison to the five-year average and 4 per cent in comparison to last November.
Meanwhile rental enquiries per estate agency branch are 46 per cent above the five-year average with rental demand being further boosted by rising mortgage rates which is limiting access to homeownership for first-time buyers, said Zoopla.
‘The gap in rental inflation between new lettings and all privately rented homes is also widening. For the 75 per cent of renters who do not move each year, rental increases are much lower at 3.8 per cent in the year to October 2022 – slower than the growth in average earnings’.
Rents are increasing fastest in the UK’s largest cities. They up 17 per cent or £273 per month in London over the past 12 months. This is also the case in other large regional cities including Manchester (up 15.6 per cent), Birmingham (12.3 per cent), Glasgow (14.1 per cent), Bristol (12.9 per cent) and Sheffield (12.4 per cent).
‘A key trend in all these cities is the demand/supply imbalance over the past year – underpinned by large student populations and the fact all these cities are major regional employers’.
‘Renters are paying the price for low levels of new investment in private rented housing over the last six years’, said Zoopla executive director Richard Donnell.
‘A chronic lack of supply is behind the rapid growth in rents which are increasingly unaffordable for the nation’s renters, especially single-person households and those on low incomes. Many are also staying put to avoid the worst of rent increases.
‘Renters are having to adopt a range of strategies to deal with rising rents. We have seen a rapid increase in demand for 1 and 2-bed flats while some renters are now considering sharing a property to cover the cost of rent. Others may now need to stay at home with parents or relatives for longer until they can afford to rent privately.
‘Only a big increase in investment in the sector will ease the pressure on affordability and boost consumer choice. In the short term, we expect the growing unaffordability of renting to reduce rental increases in 2023 to 5 per cent’.
