Rental prices in the UK have surged to a record 14-year high, the highest growth since the global financial crisis in 2008, as tenants come under pressure amid the tightest cost of living squeeze since the 1970s.
New analysis from Zoopla, published on Tuesday, found prices were up 11% in the first quarter of 2022 to £995 ($1,217) a month, an extra £88 a month compared to the start of the pandemic.
This was driven by high rental demand and limited supply.
The property portal said this follows a strong bounce back from last year, when average UK rents fell by more than 1%, despite wage growth peaking at 8.8% last summer.
Cumulative UK rental growth since the start of 2016 totals 16%. When compared to average wages and consumer price inflation, average UK rents have not kept pace since 2016, according to Zoopla. UK CPI hit a 30-year high of 7% in March.
The rise has led to a "significant increase" in the proportion of gross income tenants spent on rent, Zoopla said, with the average rent now accounting for 37% of income for a single earner in the UK.
For renters in the capital this went up to 52% for a single earner, a level not seen since March 2020, falling to 26% for sharers.
Over the next 12 months, a new let agreed for an average rental property in London will cost more than £20,000 in rent, Zoopla estimates.
"The tenancy renewal numbers we have seen so far in 2022 are unprecedented," said Gareth Atkins, Managing Director, Lettings at Foxtons. "Steadily increasing demand, severely limited stock and a swift rise in rental prices are all compelling reasons to renew — and renters are responding."
There’s also been a strong bounce back in rental growth in London from falls of 10% seen in 2021.
Average annual rental growth in the capital rose to 15% at the end of the first quarter, driven by demand for flats from students, office workers and international demand.
As demand for rental property continues to outpace supply across the country, Zoopla expects the rate of rental growth to slow through the second half of the year as the market stabilises.
Regionally, rental demand was the strongest in Scotland, Wales and London, with demand levels more than 65% above the five-year average.
The property firm said London has the "most constrained" stock levels across the market, with homes available to rent at just over half the five-year average, creating the conditions for the sharp rises in rents.
Tenants are also staying on average five months longer in rental properties compared to five years ago, with the average tenancy length up to 75 weeks from 51 weeks at the start of 2017.
Despite this, experts anticipate rent costs will ease in the second and third quarter of this year as the surge of post-pandemic rental demand "normalises".
Gráinne Gilmore, head of research at Zoopla, said: "The surge of post-pandemic pent-up rental demand will normalise through Q2 and Q3 however, which means rental growth levels will start to ease.
"Affordability considerations will also start to put a limit on further rental growth although this may occur at different times depending on location.
"Rents are likely to continue rising for longer in areas which have the most constrained stock levels — currently London, Scotland and the South West."