UK rents have hit a 13-year high, industry research showed on Wednesday, further compounding a growing cost of living crisis.
According to the quarterly Rental Market Report from Zoopla, the real estate portal, rents rose 8.3% in the fourth quarter of 2021, to £969 per month, £62 more per month than at the start of the pandemic and a 13-year high.
Overall, average rents are now up nearly 12% over the last five years, after some areas such as city centres saw demand slide during the pandemic.
The average rent now accounts for 37% of gross income for a single earner. That compares to a pandemic dip of 34% during most of 2021 and the ten-year average of 36%.
Demand for rental properties in January was 76% higher compared to the new year market between 2018 and 2021, Zoopla found, while the stock of rental properties across the UK is 39% lower than the five year average around this time of year.
Gráinne Gilmore, head of research at Zoopla, said: “Rents have risen sharply in recent months amid a backdrop of rising living costs. But it is important to point out that in terms of rental affordability, in most markets rents are still close to the 10 year average.
“As demand continues to outpace supply, there will be further upwards pressure on rents but affordability considerations will act as a brake on large rises.”
Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, said: “Rent hikes are fanning the cost of living crisis. Any renters under the age of 32 won’t have known a time when rents were higher. It’s the last thing they need when prices are soaring on every side.
“Hargreaves Lansdown research shows renters have far less wiggle room in their budgets already after paying their bills, so these rises are going to be incredibly painful.
“Supply has also been dropping for the past 18 months. Landlords have been squeezed by tax changes, so many are considering selling up while prices are high. Others are switching into the more lucrative short-let market.”
As well as high levels of rents, the cost of living is being further squeezed by surging inflation, which is now at a near 30-year high, and a 54% hike to average energy bills, as well as a planned increase to National Insurance contributions. Homeowners, meanwhile, have seen interest rates rise twice since December, with more hikes expected this year.