Rental prices surge to new record amid demand mismatch, report finds

The average rental asking price in the UK has jumped to a new record as demand continues to outstrip properties on the market, according to a report.

Property firm Rightmove’s first-quarter rental trends tracker found the average asking price per calendar month shot up by 10.8% year-on-year to £1,088 outside London and 14.3% to £2,193 inside the capital.

This marks the first time that rents outside of London rose by more than 10% annually, while the leap inside the capital was the largest of any region on record.

On a quarter-on-quarter basis, UK asking rents rose by 1.8% in the first three months of the year, the group added.

Rightmove said the sky-high rental costs are being driven by an ongoing mismatch in demand and supply, with tenant demand up by 6% and the number of available rental properties having fallen by 50% over the past year.

It said: “The result of this ongoing mismatch between tenant demand and the properties available to rent means that tenants looking for a new place to move to are being faced with the most competitive rental market that Rightmove has ever recorded.

“There are more than triple the amount of tenants enquiring as there are rental properties available, meaning a high likelihood of landlords being able to choose between multiple suitable tenants.”

But it said there were some signs that conditions might be easing, with a 5% increase in the number of rental properties coming on to the market last month when compared with January and a 16% rise between February and March.

Tim Bannister, Rightmove’s director of property data, said there were several factors behind the market challenges.

He said: “On the supply side, we’re hearing from agents and landlords that tenants are signing longer leases, which has prevented some of the stock that would normally come back on to the market from doing so.

“When it comes to demand, we’re still seeing the effects of the pandemic, whereby tenants are balancing what they need from a home and how close they need to live to work with where they can afford.”

The figures show that across the UK, outside of London, Wales saw the biggest annual rise in rental prices – up 13.9% to £882 per month, followed by the North West with a 12.8% increase to £937 per month.

The South West saw rents jump 12.2% annually to £1,202 per month, while Scotland saw growth of 11.2% to £852.

Data showing rental hotspots in the UK revealed that Swansea in Wales saw the largest annual increase in rental asking price of any region, jumping 19.7% from £653 per month to £782.

Manchester had an increase of 19.3% while Margate in the South East saw an 18.8% rise.