The supply and demand problem has seen the cost of renting skyrocket over the past year, from an annual increase of less than 2% in July 2021 to 12.3%.
Average monthly rents have increased by £115 since last year and now stand at £1,051 per calendar month.
In Yorkshire they are up 10.2% and cost an average of £697 per month. In Leeds the increase is 11.4% and the average monthly rent in the city is now £830, while in Sheffield the rise is 10.8% with rents now averaging £711.
Those looking to rent in London face the biggest challenge as rents top the growth chart there with a 17.8% increase, followed by Manchester with a 15.5% increase.
Hometrack says the rise is outpacing profit growth across all regions and countries in the UK and the situation is worsening as private owners continue to sell homes to rationalize their portfolios in the face of tax concerns and changes proposed for rental regulations.
Many have also cashed in to take advantage of recent increases in property values fueled by the pandemic.
As the pace of rent increases begins to plateau in some places, Hometrack believes there is room for above-average growth in the cheaper parts of the UK, including parts of Yorkshire. It predicts upward pressure on rents until 2023.
This and the cost of living crisis are causing people to seek smaller, energy efficient homes.
In the regions, the price difference for a two-bedroom apartment and a three-bedroom house is £105 per month, which equates to a saving of £1,260 per year.
There is now talk of rent caps, where rents are set at a certain value with increases linked to inflation or wage growth, although few people believe this will happen in England.
However, the Rent Reform Bill, once enacted, will require landlords to make their properties more energy efficient and limit the grounds for eviction of tenants.
Luke Gidney, MD of Leeds-based estate and lettings agency HOP, says: “Lack of stock means that within the first two hours of listing a rental property, we have between 20 and 30 phone calls from potential tenants within the first two hours.
“We had to put a cap at 25 views.”
He adds: “More of our owners have sold properties and it’s the same everywhere, hence the huge shortage of stock.
“Tenants are also staying longer in a house because if they move, they will have to pay a higher price.”
Rent caps have been suggested, but Luke thinks that would make a bad situation worse and lead to more landlords being sold.
Nick Simpson, CEO of Linley & Simpson, which operates across Yorkshire, said: “Unless the government opens its eyes and recognizes that landlords are the solution, rather than a problem, the situation will only get complicated.
“It is long-term policy inaction to close the growing gap between supply and demand that is at the root of what the rental sector is experiencing today.
“It’s an industry battered by the perfect storm of spiraling demand, shrinking supply and mounting cost of living pressure.”
He adds: “It’s a classic case of hens coming home to roost. Years of anti-landlord legislation and an influx of red tape have forced many landlords out of business.
“This trend has been further fueled by rising property prices, a tasty carrot on a stick that many homeowners looking to cash in are finding it hard to turn down.”
He predicts that the situation will get more complicated and calls on the new Chancellor to announce measures to encourage investment and entice owners to return to renting.
Nick points out that the Republic of Ireland saw its rental market crash a few years ago as penalized landlords fled the area.
He says: ‘Ireland has now realized that urgent action is needed and the tax breaks for private landlords, in return for staying on the market for ten years, are part of a series of incentives being considered there. Similar proactive action is needed here.