UK rental affordability crisis: Zoopla rental market report explained in 6 charts
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Renting a home is at its most unaffordable point in ten years, according to new analysis by property website Zoopla.
Tenants are now spending 28% of their pre-tax income on rent, the highest proportion in a decade. And new lets are being snapped up in under a fortnight on average as the demand for rentals soars while supply drops, the report warns.
At a city level, the annual rise in the price of new lets is highest in Edinburgh (13.7%), followed by Manchester (13%), Glasgow (12.3%) and Southampton (10.7%).
Richard Donnell, Zoopla’s executive director, said tenants continue to face a “relentless increase in rents”, adding: “While there is concern over the impact of higher mortgage rates on those with mortgages, renters have already seen a £2,820-a-year increase in rental costs over the last five years.”
Here are the key findings of the report and other official analysis of the rental crisis, explained in maps and interactive charts.
Affordability of renting a home hits 10-year low
The monthly cost of new lets in the UK has been growing faster than earnings for the past 21 months.
Zoopla’s latest figures, for April 2023, show this cost now accounts for 28.3% of average pre-tax earnings, the highest proportion in a decade. Its calculation assumes an average of 1.25 earners per home. Once tax has been taken off wages, the true proportion of people’s wages going on rent will be even higher.
Rental affordability worst for a decade in seven UK regions
This affordability measure, comparing rental costs with earnings, is currently at its worst for a decade in seven of the 12 regions of the UK. These are:
Renting in London is the most expensive of all regions, with costs averaging 40% of gross earnings. But it is still below the peak of 43% reached in September 2015.
Growing number of tenants falling behind on rent
The price of renting a home continues to climb at a fast rate across the UK. Average rents hit £1,126 in April, a 10.4% increase in a year. It is the 15th month in a row that rental costs have seen double-digit annual growth, with analysis blaming a chronic imbalance between supply and demand.
The report warned the impact of higher rents is not uniform, with those on low incomes bearing the brunt. Analysis from the Office of National Statistics shows a small but growing number of tenants are falling behind with their rent. The proportion has doubled in the past six months, from 4% to 8%.
Cities and regions where rents are rising fastest
Of the 12 UK regions, London has seen the fastest rising rental prices, with average monthly rents up 13.5% in the year to April. It also has the priciest rents overall, at an average of £2,001 for new lettings of between one and four bedrooms.
New lets snapped up as demand outstrips supply
New residential lettings are being snapped up in just 13 days on average across the UK, the Zoopla analysis shows. Analysis of 11 major UK cities shows properties in Bristol are going quickest, taking just 10 days to let, followed by Southampton at 11 days.
The imbalance between supply and demand is worsening, the report shows. The number of homes available for rent remains at between 20% and 40% below pre-pandemic levels in most regions. This means more renters are chasing fewer homes, which drives up prices.
Predictions for the future
Zoopla anticipates the rise in rental costs to slow towards 8% by the end of the year, but expects this to remain above any growth in earnings.
Mr Donnell said: “Renters continue to face a relentless increase in rents, compounding wider cost of living pressures and making home-moving decisions ever more challenging, especially for singles and those on lower incomes. The chronic imbalance between supply and demand continues to push rents higher but we expect increasingly stretched affordability will start to reduce the pace of rental growth into 2024.”
He said a proportion of landlords continue to sell their properties, but described talk of an exodus as “overstated”, adding: “Half of all landlord sales are in London and the South East where yields are lowest and the economics of being a landlord are toughest.”
A government spokesperson said: "Our Renters Reform Bill will deliver a fairer deal for renters. It will empower them to challenge unjustified rent increases and protect tenants as we keep our commitment to ban ‘no fault’ evictions.
“Housebuilding remains a priority for this government. We have already delivered more than two million homes in England since 2010 and we are committed to building 300,000 homes every year to help create a more sustainable and affordable housing market.”