The rate at which rent prices are rising has slowed, but prices still remain at their most expensive when compared to earnings in over a decade, according to a new report by Zoopla.
In London, where shrinking supply has left tenants facing historic hikes in monthly costs, rental inflation is up 5.2 per cent against a rise of 15.3 per cent a year ago.
Zoopla said the balance between supply and demand has narrowed the most in the capital, with demand 30 per cent lower than a year ago and available supply increasing by the same amount.
Today, the average tenancy in London costs £2,121 a month on rent.
Consistent interest rate hikes made by the Bank of England last year in efforts to reduce inflation have damaged the entire ecosystem of the housing sector.
Landlords began either selling their properties to dodge rising mortgage payments – limiting the pool of supply – or passing high costs onto their tenants.
Lodgers also began offering above the asking price to secure a room or flat leading to bidding wars.
Rents have previously been forecasted to rise by three per cent this year and then hit an “affordability ceiling,” Rightmove said in January.
Across the UK the typical home for rent sees 15 enquiries which is significantly reduced from 40 enquiries per property in 2021, but still double pre-pandemic levels.
Richard Donnell, executive director at Zoopla said while there are signs of improvement, the UK still needs more homes becoming available to rent.
“Only a rapid and sustained expansion in rented housing will start to improve affordability for UK renters,” he said.
“Rents remain at their most expensive compared to average earnings for over a decade.”
“The last two years have been characterised by an ongoing imbalance between rental supply and demand.
He added: “This has pushed rents for new lets 30 per cent higher since 2021 adding to cost of living pressures for renters.
“The imbalance between supply and demand has started to narrow but is far from closed. Rents for new lets will continue to rise over 2024, albeit at a slowing rate.”