Private renters in the UK have experienced sharper rises in housing costs than homeowners with mortgages since 2022, according to recent research published by Zoopla. This trend highlights the growing financial pressures facing tenants amid a strained housing market and limited rental supply.
As it stands, the average rent in the UK now sits at £1,283 per month. This figure is notably higher than the average monthly mortgage repayment, which currently amounts to £1,154 for borrowers with an outstanding mortgage balance. The difference between these two figures has widened in recent years, putting increased pressure on those renting privately.
Over the past three years, mortgage repayments have gone up by an average of £218 per month, largely due to interest rate increases triggered by inflation and economic instability. While this is a significant jump for homeowners, it has been matched — and slightly exceeded — by rent increases. The typical rent for new lets has climbed by £221 per month over the same period, driven by rising demand and stagnant supply.
Rental demand spiked during 2022 and 2023 as more people sought housing in the wake of the pandemic. At the same time, the number of properties available for rent did not keep up with this growth. This supply shortage was made worse by landlords choosing not to invest in new rental properties due to tighter regulations, tax changes, and increased maintenance costs.
Some localised areas have seen rent prices climb at an even faster rate than the national average. Towns such as Oldham, Wigan, and Bolton recorded increases of more than 31% over a three-year period. Much of this is due to these areas starting from a relatively low rental base, making the percentage rise appear more extreme, yet still significant in terms of actual cost to tenants.
London remains the most expensive place to rent in the UK, and it has also experienced the steepest monetary increases. In some outer boroughs like Ilford in East London, rents have jumped by up to £400 per month since 2022. These areas were once considered relatively affordable, but rising demand has driven prices up dramatically.
Several factors have contributed to the increase in rental demand. The strong job market has encouraged movement across cities and regions, while higher migration levels for work and study have led more individuals and families to seek rented accommodation. This surge in demand has collided with limited supply, pushing prices higher.
First-time buyers have also played a role in sustaining rental demand. With mortgage rates spiking in 2022 and 2023, many prospective homeowners found it harder to secure financing. As a result, many have been forced to remain in rental properties longer than planned, adding further strain to an already stretched rental sector.
While wage growth has been relatively strong over the last few years, helping some tenants manage higher housing costs, not everyone has benefited equally. Those on lower incomes or receiving government support have found it particularly difficult to keep up, resulting in a deeper cost-of-living squeeze for the most vulnerable groups.
Encouragingly, there are signs that rental inflation may be slowing. According to Zoopla, rent growth for new lets is now at its lowest rate in four years. This may be partly due to a decline in international migration for work and study, as well as signs of improvement in the mortgage market that may be enabling more first-time buyers to leave the rental sector.
Another factor putting a brake on rising rents is affordability. Quite simply, many renters are already spending a significant proportion of their income on housing, and further increases may be unsustainable. This affordability ceiling is helping to limit how much landlords can continue raising rents.
In contrast to renters, homeowners with mortgages have fared slightly better thanks to financial safeguards introduced nearly a decade ago. Since 2015, stricter lending regulations have required mortgage applicants to prove they could cope with future rate increases, which has helped prevent widespread financial distress among borrowers.
Mortgage holders also benefit from the fact that their monthly repayments gradually reduce the loan amount. Unlike rent, which simply covers the cost of accommodation, mortgage payments build equity in the property, offering long-term financial security that renters do not receive.
Despite the recent slowdown in rental inflation, Zoopla warns that demand for rented homes remains high and supply continues to lag behind. The lack of new rental housing entering the market, particularly in both private and social sectors, is maintaining upward pressure on rents and making long-term affordability a concern.
Richard Donnell, executive director at Zoopla, noted that concerns around mortgage affordability dominated headlines during recent interest rate hikes. However, renters have been equally affected — if not more so — as strong demand and a limited rental stock have led to substantial rent hikes. He emphasised that boosting the supply of rental homes is the fastest way to tackle high rents and ensure more people can access affordable housing. For this reason, expanding rental housing should be a top priority for government policymakers across all tenures.
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