National rents outside London lifted by 3.2% on average in the third quarter of the year to hit a record £1,162 per calendar month, according to Rightmove.  

While in the capital average rents rose by 3.8% in the period to £2,343 per calendar month, leading to the biggest ever annual jump of 16.1% for tenants, says the property website’s third-quarter Rental Trends Tracker first launched in 2006.  

The study points out that the quarter’s increase of 3.2% for national rents is only the third time since the report began that rents have risen by 3% or more in a quarter.  

It says: “The pace of asking rent growth is primarily down to the severe shortage of available rental properties, combined with extremely high demand which continues to surpass even last year’s levels in every region and country of Great Britain.”  

The tracker adds that demand is up by 20% compared with the same period last year, while the total number of available rental properties is down by 9%.   

“This widening gap between supply and demand is creating ever fiercer competition between tenants looking for a home,” it says.  

The report says that recent mortgage interest rate rises mean that even with record rents, the average monthly mortgage payment for a new first-time buyer putting down a 10% deposit is now a fifth more than the rental payment for the equivalent property. This adds up to £1,121 per calendar month for a mortgage payment, compared with £932 per calendar month to rent.  

It points out that this move has placed added pressure on the demand for flats and smaller properties to rent when the demand for smaller homes to rent is already high. Studio flats have overtaken one-beds as the most in-demand type of flat for renters.  

The report says: “Studio flats were typically more in demand in the years leading up to the pandemic, however, they were overtaken by one-beds when the market reopened in May 2020 and city living temporarily became less popular.   

“Competition between tenants for available studios is 71% higher than it was last year and there are now four times as many tenants looking for a studio flat as there are studio flats available.”  

The study says that agents suggest that stretched budgets and the returning popularity of city centres are contributing to the shift, as more tenants look for the cheapest property available without giving up a city centre location, instead of potentially getting more for their rent further out from an urban area.  

Rightmove director of property science Tim Bannister says: “It’s a real challenge for renters at the moment, as there are simply not enough homes available to rent to meet the demand from people enquiring.   

He adds: “We will need a significant addition of homes to come onto the market to even begin to balance the scales.   

“Those looking to rent a smaller property in the next few months may find that they face some added competition from would-be FTBs, who have had their purchase plans scuppered for now due to the sudden rise in mortgage interest rates, and are now looking to rent.”