The cost of renting a home in the UK has seen an acceleration in rises after a three-year slowdown. Property website Zoopla reported that average rental costs for new tenancies were up 2.6% in July compared with a year earlier.
Zoopla forecasts that annual rent increases for privately rented homes will reach 4% or 5% by the end of the year. This acceleration is attributed to fewer homes being available to rent and increased competition, partly due to potential first-time buyers being deterred by higher mortgage rates.
The number of homes on the market for renters has been squeezed, with 3% fewer available than a year ago. Each listing now receives an average of more than five enquiries, marking the most intense competition in nearly two years.
Rental demand is particularly significant in London, according to the Zoopla report. While rent rises are occurring across the UK, the situation varies by location, with less expensive areas having more capacity to absorb increases.