Rental prices across Britain surged to new record levels in August, as shrinking availability continued to drive up costs, according to fresh data.
Figures from Rightmove show that the average advertised monthly rent now stands at £1,577, representing a 2.9 per cent rise compared with the same period last year.
Interestingly, tenant demand has started to ease, but the sharp drop in available rental homes has kept the market under intense pressure, with competition between renters still fierce.
Much of this imbalance has been fuelled by landlords leaving the buy-to-let sector, as rising costs and shrinking profits have made property investment less appealing.
Last year’s Budget introduced a stamp duty surcharge on second homes, instantly adding thousands of pounds to landlords’ purchase costs. This extra expense has been a major deterrent for many considering entering or expanding in the rental market.
On top of that, landlords are preparing for tougher energy efficiency rules, which could see them spending tens of thousands of pounds to upgrade their properties to meet a minimum EPC rating of band C.
While mortgage rates have edged down in recent months, they remain far above the record lows of just a few years ago. Buy-to-let mortgages are typically more expensive than residential deals, further eroding returns for investors.
Faced with dwindling yields and more red tape, many landlords are rethinking their options. This exodus has squeezed rental supply even further, leaving many tenants unable to save for a deposit and locked into the rental sector.
The steepest rent increases are being seen in the North West, where advertised rents have jumped nearly 10 per cent in the past year to £1,278 a month.
At the other end of the scale, the North East remains the most affordable region, with average rents at £918 – the only part of Britain still below £1,000 a month. Even so, prices there have also seen steady growth of almost 3 per cent year on year.
London continues to be the costliest region, with average rents hitting £2,699 a month. However, growth in the capital has been relatively modest at just 2 per cent over the past year, reflecting a slowing market.
Elsewhere, the South East and South West have seen subdued increases, with annual growth of only 2.4 per cent and 2.1 per cent respectively. In Wales, the average rent now sits at £1,107, while tenants in Scotland are paying around £1,441 each month.
Despite a slight improvement in the number of homes available to rent – up 8 per cent in the year to August – rental stock is still 27 per cent lower than in 2019. This remains the tightest supply seen in years.
The rental squeeze comes just as Chancellor Rachel Reeves prepares her Autumn Budget, where reports suggest further tax measures on landlords could be unveiled. One proposal being considered is applying National Insurance to rental income, potentially raising billions for the Treasury.
Alongside this, the forthcoming Renters’ Rights Bill will reshape the private rental sector. The legislation aims to ban no-fault evictions, apply a decent homes standard to rented properties, and strengthen tenants’ rights, including the ability to request pets.
While welcomed by renters, these reforms – combined with new tax burdens – have left many landlords feeling unsupported. Rightmove’s research shows that one in three landlords are considering selling, with 66 per cent saying the Government has failed to back them.
The figures suggest that new rules and additional costs are the top frustrations among property investors, with over two-thirds citing legislation as their biggest challenge. Only a fifth plan to expand their portfolios in the coming year, with many opting to reduce or exit instead.
For Britain’s 4.6 million private renting households, the outlook could be bleak. With homeownership increasingly out of reach due to soaring property prices and higher mortgage costs, renters may face even steeper monthly payments if supply continues to shrink.
Rightmove’s property expert Colleen Babcock warned that while tenants now face less competition than a few years ago, the record-high rent levels mean options remain limited. She stressed that landlords provide vital housing and urged policymakers to ensure renting remains financially viable for investors.
Fresh data from SpareRoom highlights another shift – demand is moving away from expensive city centres towards suburban areas. Towns near Manchester and Liverpool are proving particularly popular, with almost nine renters chasing each available room.
Sale, a town just outside Manchester, has emerged as the most in-demand rental hotspot, with average room rents at £637. Meanwhile, Oldbury in the West Midlands has seen demand surge, with nearly nine potential tenants per room compared to fewer than four in 2019.
This shift reflects renters’ efforts to balance affordability with accessibility, as many seek better value in the suburbs while retaining links to major employment hubs.
Download NOW
4 Simple Steps To Becoming Wealthy Through Property