The average rent in the UK right now
New analysis from property firm Zoopla shows that private renters have seen a greater increase in their monthly housing costs since 2022 than mortgaged homeowners.
Average rents in the UK currently sit at £1,283 per month, with mortgage repayments for an average outstanding loan at £1,154 per month.
Over the last three years, higher mortgage rates have increased the average mortgage repayment on outstanding mortgages by £218 per month.
Rents for new lets have risen by £221pcm over the same period as demand for rented homes grew rapidly over 2022 and 2023, while the stock of private rented homes has remained broadly static due to low levels of new investment by landlords.
“Some local areas have registered particularly rapid increases in rents over the last three years as rental demand has run well ahead of the growth in rental supply. In places like Oldham, Wigan, and Bolton, rents have surged by over 31% in three years as rents increased off a relatively low base,” Zoopla said.
“Rents are highest in London with these areas registering the largest monetary increases, up by up to £400pcm over the last three years, with the greatest increases in more affordable areas in outer London such as Ilford in East London.”
Surge in rental demand
The rise in the costs of renting since 2022 is down to a surge in rental demand in the wake of the pandemic. A strong labour market and higher levels of migration for work and study have boosted rental demand. Mortgage rates spiked higher over 2022 and 2023 making it harder to buy homes, with many first-time buyers remaining in the rental market for longer, further boosting demand while also suppressing supply, pushing rents higher.
Robust growth in average earnings over the last three years has supported the faster growth in average rents however, private renters on lower incomes and those relying on state support have faced a greater squeeze on living costs from higher housing costs, Zoopla said.
“However, rental inflation for new lets is now running at its lowest rate for four years as rental demand has weakened off a high base due to lower levels of migration for work and study and improvements in mortgage market conditions for first-time buyers. Rental affordability is also limiting the pace at which rents can increase.
“The mortgage market has been resilient to higher mortgage costs, largely down to tougher mortgage regulations introduced from 2015, which ensured borrowers could afford higher rates in future. One advantage for mortgagees over renters is that their monthly repayments go towards covering both interest costs and the repayment of the loan, which reduces slowly over time.”
