Rental hotspots: These areas have seen month-to-month prices rise 40% in 4 years

Renters have endured a tough time in recent years, paying ever-higher prices as they compete for a declining number of available homes.

The average property is now renting for £1,270 a month, according to Zoopla, with renters paying 34 per cent more than they were four years ago.

It means that in the most recent four years, rents increased almost ten times as much as they did in the previous four-year period.

Average rents rose by 3.5 per cent between September 2016 and 2020, compared to 34.1 per cent between September 2020 and 2024, Zoopla said.

But, while rents have risen at a staggering rate in recent years, certain areas have seen prices rocket well over the average.

Some cities have seen rents increase by 40 per cent or more over the past four years – a rate of more than 10 per cent per annum.

Glasgow has seen rents rise more than any other UK city in that period, according to Zoopla, with average rents rising 44.4 per cent. However, a home in the Scottish city is cheaper than the UK average, going for £989 a month.

Edinburgh has also seen big increases in rental prices, with the average home in the Scottish capital rising by 41.3 per cent to £1,349 a month. Dundee is not far behind, with rents rising 39.4 per cent to £803 a month.

Some English cities have also seen rental prices skyrocket. Bradford has seen rents rise 42.8 per cent over the past four years. Between 2016 and 2020 the city only recorded 4 per cent rental growth.

Manchester has seen average rents rise 41 per cent over the past four years. The average property in Manchester now lets for £1,122 a month.

The rental growth in Manchester is closely followed by Cardiff, Stoke-on-Trent and Bristol, which have all seen rents rise by around 38 per cent during that time.

Rents have risen by at least a fifth across all cities in the last four years. 

Among those with rises on the lower end of the scale were Aberdeen, which has seen rental prices rise by 23.4 per cent to £718 a month, Sunderland, which has seen rents increase 27.1 per cent, and Leeds where renters are paying 27.2 per cent more on average than four years ago at £986 a month.

Some southern cities have also seen a below-average increase in rents.

Average rents in Oxford are up 28 per cent over the past four years, while in Brighton, the typical property is letting for £1,629 a month, which is 28.5 per cent more than in September 2020. 

London boroughs see bigger rent rises 

Parts of London have seen rents rocket even further over the past four years, according to separate data from tenant referencing company HomeLet.

It revealed North West London, including boroughs such as Barnet, Brent, Ealing, Harrow and Hounslow, has seen average rents rise by 48 per cent since September 2020. 

This means the average property has gone from costing £1,438 a month to £2,129 a month. 

These same areas only saw rents rise by 1.6 per cent over the previous four years.

Meanwhile, areas in South London, including Bromley, Croydon, Merton, Kingston Upon Thames and Sutton, have seen prices grow 42 per cent in four years, having risen just 2.8 per cent over the previous four years.

Adam Jennings, head of lettings at estate agency Chestertons, says: ‘The core reason for rent increases in the capital is the high level of tenant demand that the volume of available rental properties simply cannot satisfy.

‘Demand for rental properties across the capital continues to grow as many aspiring homeowners still find it difficult to save enough for a deposit; especially in the midst of the cost of living crisis and when they don’t have the support from the bank of mum and dad. 

Jennings adds: ‘Despite there now being slightly more attractive mortgage rates, the market has seen a significant increase in interest rates in 2022 which meant that many would-be buyers decided to continue renting until mortgage repayments become more affordable.

‘At the same time, there has been a decrease in the number of rental properties as tax and legislation changes have resulted in landlords exiting the market.’

Major cities are not the only locations to have seen rents rise. Average rents in Dorset and Somerset in the South West of England have risen 52.5 per cent over the past four years, according to HomeLet.

Homes on the market in both counties are now commanding £1,527 a month on average, up from £1,001 in September 2020. 

Eastern Scotland has seen rents rise 51.6 per cent, while Cornwall and the Isles of Scilly have seen prices rise 48.1 per cent.

Rents in Cumbria are up 47.9 per cent in four years and in East Wales the average property is renting for 43 per cent more than it was in September 2020. 

Why are rents going up? 

Andy Halstead, chief executive of HomeLet believes continued Government intervention in the rental sector is to blame for rising rents.

He says: ‘From 2017, the Government removed the ability to off-set mortgage interest costs against rental income, effectively taxing all rental income as earned income, regardless of the mortgage costs. 

‘This action placed many property investors into a cashflow loss, forcing them to increase rents to tenants.’

Halstead added: ‘In February 2019, the Government banned all fees payable by tenants. The intention was to reduce tenant costs and win votes, but the obvious consequence was that rents increased, and rather than pay a fee at the beginning of the tenancy, tenants paid increased rents for the duration of the tenancy, costing them much more.

Since 2019, increased legislation and regulation has hit the sector exacerbating the problem, according to Halstead.

‘Every action has increased the costs to landlords and the letting agents who serve them,’ says Halstead.

‘The latest Renters Rights Bill will be devastating, whilst it is yet to become law, the consequences are obvious. 

‘Landlords are exiting the market in droves; rental homes are in very low supply and demand has never been higher. Again, the obvious consequence is higher rents.’

Last week’s Budget won’t help matters either, according to Halstead. The Chancellor delivered her largest tax rise in the form of an increase in employers’ national insurance contributions. 

‘The private rental sector is a cottage industry, the massive increase in Employers National Insurance will make local letting agent business very difficult to remain viable,’ he says. 

‘Until we get a Government that is prepared to listen and understand, I do not see light at the end of the tunnel.’

Chancellor Rachel Reeves delivered a further sucker punch to buy-to-let investors in Wednesday’s Budget in the form of a fresh stamp duty increase for second homes.

These buyers already faced a 3 per cent surcharge above and beyond what those purchasing a property to live in currently pay. 

However, from 30 October that went up to 5 per cent, adding thousands of pounds to the cost of buy-to-let and second home purchases.

Under previous rules, a £300,000 property with the surcharge included would cost £11,500 in stamp duty.

That has now risen to £17,500 with the surcharge rising to 5 per cent.

On the same property, a person buying the home to live in would pay just £2,500 – and if they were a first-time buyer, nothing at all.  

A second home purchase costing £500,000 previously cost £27,500. Now it will set someone back £37,500.

Tanya Hasking, head of lettings at John D Wood & Co thinks the extra surcharge will further discourage new investors from entering the rental market which will inevitably lead to higher rents. 

‘With this higher surcharge, we’re likely to see fewer people choosing to buy rental properties, which will only intensify the pressure on an already strained supply of homes,’ says Hasking.

‘At a time when there’s an imbalance in supply and demand, policies that deter property investment ultimately hurt tenants by limiting available options. 

‘If we’re to keep the rental market sustainable, it’s essential to create an environment that encourages property ownership and supports those providing housing for renters.’

Is the market finally cooling for renters?

Despite huge rises in recent years, there are signs that the rental market is cooling. For a start, Zoopla says that the average rent across the UK is up 4.4 per cent year-on-year.

This is a far cry from the double-digit annual increases recorded over much of the previous four years. 

That said, in some cities rents have risen by 8 per cent or more over the past 12 months, including Bradford, Norwich and Newcastle.

However, other cities have seen rents only nudge up. For example, rents in Nottingham are up only 0.6 per cent over the past 12 months, according to the property website.

Meanwhile, average rents in London are only up by 1.7 per cent.

Dominic Agace, chief executive of estate agent Winkworth says that rents have hit a ceiling in some areas.

‘Trends have settled down again now we have the Covid years behind us. 

‘There is still an increasing shortage of rental properties. However, we are now seeing an affordability ceiling being reached. 

‘This has meant that increasing numbers of young professionals are commuting further to their jobs or living at home to avoid current rental costs.’ 

Adam Jennings, head of lettings at estate agency Chestertons thinks there are signs that the market is improving for renters. 

‘In 2024, we found that high rental prices actually motivated new landlords to enter the market,’ says Jennings.

‘Not only has this provided tenants with a larger pool of properties to choose from, it’s also reducing the likelihood of drastic rent increases if demand and supply levels will become more balanced.’