Rising numbers of renters are choosing to stay in their current home as competition for rental properties intensifies.
Nearly 75% of letting agents have seen an increase in renters renewing their contracts during the past 12 months, according to industry body Propertymark.
Their decisions come against a backdrop of rising demand for rental homes. Each letting agent branch received an average of 127 new rental applications during July.
But supply remains tight, with each branch having an average of just 11 rental homes available. That means would-be tenants are in competition with at least 10 other parties for each home.
Unsurprisingly, the mismatch between supply and demand is continuing to push rents higher. A record 82% of letting agents have reported month-on-month increases in rental rates.
Nathan Emerson, CEO of Propertymark, said: “The private rental market continues to be battered by the perfect storm of high demand, low availability and affordability issues that shows no sign of easing.”
Why is this happening?
Demand for rental homes is growing as rising house prices leave would-be first-time buyers facing a longer wait to get on to the property ladder.
But the number of homes available to rent has been on a steady downward trajectory for a number of years. A series of tax and regulatory changes have led some landlords to sell up their investment homes.
Meanwhile, rising interest rates have led to increased costs for investors.
These factors have combined to put significant upward pressure on rents, with the situation showing little sign of improving.
Who does it affect?
The increase in rents is hitting young people hard. Four out of 10 people aged under 30 now spend more than 30% of their income on rent, according to property consultancy Dataloft.
While rents are highest in London, the research found that the situation had also worsened in previously affordable locations such as Rotherham and Bolton.
What should I do if I rent?
If you currently live in a rental property, you may want to consider staying where you are.
Our research suggests landlords are not raising rents as steeply for existing renters as they are for new ones.
This is likely to be due to the fact that landlords do not want to lose good renters.
They'll also be keen to avoid the costs associated with finding new tenants, as this can offset rises in their rental rate.
If you're looking for a new home to rent, don’t lose heart.
The rental market tends to be highly localised, and there are still locations where rental homes remain affordable, particularly in rural areas.
If you have the flexibility to move anywhere, you could consider relocating to a cheaper area.
But even if you're tied to a certain location, you should still be able to find pockets of affordability.
Search homes for rent to explore cheaper areas near you.
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