The pace at which rents increase will soon outstrip house price growth as the property market boom ends and rising prices force people to rent for longer, new analysis has shown.
Rents will climb 5pc per year from now until 2027 as the cost of living crisis shuts buyers out of the housing ladder – boosting demand for rental property – according to a survey by the Royal Institution of Chartered Surveyors, a trade body. House price growth will slow to just 4pc per year over the same time period.
Estate agents reported that demand from buyers has fallen for the first time in nine month – the latest signal that the property market boom is ending, as interest rate rises push up mortgage costs.
Just as the sales market cools, the rental market is becoming even more frenetic. Agents reported high expectations for rising rents over the next three months as more potential tenants combines with fewer homes on the market. The supply of rental homes fell or was flat in 10 out of 11 regions across the country.
However, the surging rental prices is spurring new investment. David Shaun Brannen, of Brannen & Partners estate agents in the North East, said: "Confidence is returning to investors, with more buy-to-let landlords re-entering the market."
But where should you buy? Using data from The Telegraph’s Buy-to-let market tracker, we have ranked local authorities by how quickly rental properties let out after they are listed on the market. These are the hottest and coldest rental markets in the country.
The hottest rental markets in Britain
The most fast-paced rental markets in the country are grouped in three key areas: London, Scotland, and coastal markets in the South of England.
In Adur and Lewes, the districts on either side of Brighton on the South Coast, properties let within eight and nine days respectively. In West Somerset, which sits on the Bristol Channel in the West Country, homes also let in nine days. Of these, Adur offers the best returns, with rental yields at 4.5pc. The average buy-to-let costs £372,900.
Scotland is home to three of the fastest rental markets in Britain. Rentals in Moray on the north coast, Glasgow and Clackmannanshire, just west of Stirling, all let within little more than a week of being listed.
Of these, Clackmannanshire offers the best value, with buy-to-lets costing £129,500 on average and rental yields at 7.2pc. Glasgow offers the highest rental income, however, with monthly rents at £754 compared to £545 in Clackmannanshire. Yields in Glasgow are 6.7pc.
London has a reputation for low rental yields, but the rental market here is exceptionally fast paced. Of the top 10 local authorities with the shortest times taken to let, three are in the capital.
In the London boroughs of Islington, Waltham Forest and Sutton, properties let within 10 days of listing. The respective rental yields in each are 3.9pc, 4pc and 4.4pc.