Demand for rental accommodation in the UK has increased by 23% in one year, with rents reaching an all-time high | Property rental

Demand for rental accommodation across the UK has jumped by nearly a quarter in a year, research shows, adding pressure to an oversubscribed market and pushing record private rents even higher.

The number of people inquiring about homes for rent is up 23% from the same time last year, according to real estate website Rightmove, driven in part by some potential buyers who are putting plans on hold hoping that mortgage rates will drop in the New Year.

This in turn has fueled a rise in the amount landlords charge, with separate research from London estate agent Foxtons reporting that rents in the capital in the first nine months of this year rose 22% from a year on year, with the average rent now at a record £571 per week.

However, the cost and availability of mortgages has started to stabilize after a turbulent two months after government mini-budget Liz Truss spread chaos in the market, with indications that rates could fall further next year. .

The two-year average rate has fallen from a peak of 6.65% at the end of October to 6.12% today. Meanwhile, the average five-year fixed rate this week fell below 6% for the first time since the mini-budget, according to Moneyfacts, and is now at 5.92%.

Rightmove warned that mortgage rates would stabilize at a higher level than buyers have been accustomed to in recent years. The Bank of England is expected to raise its key rate to 4.25% by next spring, although this rate is lower than previously feared.

First-time buyers have been hardest hit by soaring mortgage rates, especially those who were already financially strained.

They are likely to find the competition for a suitable rental home much fiercer than in the sale market, and the choice more limited, Rightmove said. The number of smaller rental units available – studios and one- and two-bedroom apartments – is down 4% from last year, while in the sales market it is up 13%.

Christian Balshen, property expert at Rightmove, said: “It is extremely frustrating for so many people in the rental market, with such high demand. The number of aspiring first-time buyers who have now had to turn to the rental market further aggravates the situation. We are seeing other properties come on the market, but not enough to meet demand.

Amardeep Lall, lettings manager at Manning Stainton, a property agency in Leeds and West Yorkshire, said: “Since the start of the pandemic, the number of tenants looking for a property has far exceeded the number of rental accommodation available. This means it has become very competitive between tenants to get a showing and a property, as there are only a limited number of showings we can book.

Until the pandemic, rents closely tracked incomes, with rent growth since 2005 averaging 2.5% per year and income increasing by 2.4%. According to research published by Rightmove last month, advertised rents have jumped even more than in the capital in some other towns and cities, including Newbury, Manchester, Cardiff, Edinburgh and Birmingham.

“The impact of the post-Covid return to the city has been acute,” Foxtons said. “While history suggests that the rental market will correct itself with income, the underlying balance between supply and demand could be compressed by an influx of international students and businesses that are not dependent on personal income.”

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