Rental growth outside London has hit 8.0%, the highest figure ever recorded by the Hamptons monthly letting index.
The cost of renting rose by 10.6% in the South East, the first time the region has entered into double-digit growth.
Rental growth nationally has been fuelled by a lack of stock – 300,000 fewer properties have come onto the rental market since the onset of the pandemic (March 2020 to February 2021), nearly a fifth less than during the preceding 12 months.
Aneisha Beveridge, head of research at Hamptons, said: “This year we’ve seen a sharp decline in the number of rental homes coming onto the market. Would-be tenants are now faced with significantly less choice, which in turn is pushing up rents.
“And with many landlords having multiple offers on the table, half of investors have been able to increase the rent they charge.
“Rental stock levels have also been hit with the onset of the pandemic causing investors to hold back. This has been compounded by emergency legislation which saw landlords having to extend a tenant’s notice period to a minimum of six months, reducing turnover further.
“At the same time, many renters who were looking to buy had to put their plans on ice and continue renting, as banks sought larger deposits for house purchases.”
Rents in inner London, where demand has been decimated by the pandemic, have fallen by 17.7% to £2,185.
However in Outer London rents grew 5.3% annually, suggesting expensive areas where rents have fallen the most.
Beveridge added: “Over the last five months, and in an effort to beat the original stamp duty deadline of the end of March, landlord purchases started to rise, which will add to stock levels when these homes complete.
“Meanwhile the government announced a new Mortgage Guarantee Scheme in the Budget which is aimed at helping would-be buyers with small deposits, many of whom are currently renting. Both factors, alongside the ending of the eviction ban in April, mean rental stock levels may have bottomed out.”
This post has originally been featured in Property Wire.