The number of homes for rent is 24% below the pre-pandemic average, according to its latest rental market report.

Average rents rose by 5.4% from around £1,182 per month in July 2023 to £1,245 per month in July of this year.

The rate of annual growth is half the rate it was a year ago, but the lack of available properties remains a significant challenge for renters, Zoopla warns.

It says that while the number of homes for rent is almost a fifth higher than last year, this is from a low base and supply remains well below pre-Covid levels.

Locations outside major cities, which remain more affordable than central urban lets, are now seeing double-digit growth in rents.

In England, rents have risen steeply year-on-year in Wolverhampton (12%), Oldham (11%), Darlington (10%) and Walsall (10%), all areas adjacent to large cities with higher rents or well connected for transport and access to cities further afield.

In Scotland, Kilmarnock (13%) and Kirkaldy (12%) have seen the highest increase in rents, which are 25-35% the average rent in Glasgow.

Zoopla predicts the imbalance in rental supply and demand will continue into 2025.

Executive director Richard Donnell says: “The slowdown in rental inflation is being drawn out by a lack of homes for rent and continued strong demand, driven by the unaffordability of home ownership.

“Rental inflation is slowing in some major cities where rents are high but they are still increasing quickly in more affordable areas.

“Any new policy or tax changes that result in a reduction in supply will simply push rents higher hitting low incomes renters hardest.

“It is essential policy makers focus on growing the stock of homes for rent as the primary route to slowing rental inflation and improving choice for renters.

“As things stand the growing unaffordability of renting is the only route to slower increases in rents.”

Benham and Reeves director Marc von Grundherr says: “There remains an incredibly high demand for good rental accommodation and we simply don’t have the supply reaching the market to satisfy this demand.

“As a result, properties are being let at an extremely quick pace and this supply and demand imbalance is driving rental values ever higher.

He argues that the problem is likely to persist with as landlords are deterred from investing by the government’s rental reforms and tax changes expected in the Autumn Statement.

He adds: “In doing so, the level of quality rental accommodation is only likely to reduce further and whilst the landlord exodus may be somewhat exaggerated, we’re already in need of more homes at present and so any further reductions in stock will only cause the rental crisis to worsen.”

Propertymark chief executive Nathan Emerson says: “The rental market has been suffering from a lack of supply against an ever-growing demand for a concerningly long period of time.

“The housing sector continues to see issues escalate year on year and the real-world effects is that renters face an increasing challenge to secure a suitable property for their needs.

“With tax changes and additional liabilities being imposed on many landlords, plus increases to the general cost of living and mortgage repayments this places extreme pressure on operational costs.

“This, put against a backdrop of the Renters’ Rights Bill introduction, has the potential to add further uncertainty to the mix for current and prospective investors and contribute to worsening already worryingly low supply levels.

“It is important that any new legislation is introduced with a balanced and fair approach for all parties involved to help encourage long-term investment in providing high-quality housing in areas that desperately need it.”

However, campaigners for tenants argue that reforms are long overdue and will go some way to help.

But they say the government still needs to go further.

Generation Rent chief executive Ben Twomey says: “The Bill will ban scheduled unaffordable rent increases being written into contracts but we remain vulnerable to backdoor rent-hike evictions.

“The proposed blanket ban on landlords pitting tenant against tenant in bidding wars cannot come soon enough, but if landlords are allowed to continue with unchecked and unaffordable rent rises, thousands more of us will still be forced into poverty and onto the streets.”