Typically, rental levels correspond to wage growth, which often aligns with or slightly lags behind the inflation rate. Over the past few decades, rental levels have shown relatively stable growth, averaging around 2-3% annually. However, the real estate industry has flourished since the late 1990s, particularly with the introduction of buy-to-let mortgages, contributing to the phenomenon of rising rents.

Especially since 2020, rental prices in the UK have experienced an unusually rapid increase, primarily due to supply-demand imbalances and competition among tenants driving up prices. According to data from Zoopla, the average rent for new rental properties has increased by one-third over the past three years. Specific data includes:

- The national average rent increased by 9.7%;

- Rents in the London area increased by 9%;

- Rents in Scotland increased by 12.9%.

It's worth noting that the high increase in rents for new leases in Scotland is due to the existing lease cap, which allows for a maximum annual increase of 3%.

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So, why are rents rising? Simply put, tenants have found ways to afford these rents. However, it's important to note that Zoopla's data only applies to newly signed leases.

According to the UK's Office for National Statistics (ONS), the overall average rent, including existing leases, increased by 6.2% in November 2023 compared to a year ago. In comparison, the average wage growth rate during the same period was 7.2%, with welfare growth rates typically higher.

Despite recent significant rent increases, data from the English Housing Survey shows that the proportion of income tenants use to pay rent last year was slightly lower than it was a decade ago. However, excluding housing benefits, this proportion rises to 37%, explaining why many tenants feel stretched.

So, will rents continue to rise? While the current growth rate has moderated, rents are expected to increase overall as wages grow over time. As long as there's a supply-demand imbalance, rents may continue to rise, although the magnitude may remain within affordability limits.

According to Zoopla's forecast, rent growth in 2024 will significantly slow down as affordability affects demand and supply slightly improves. London and other higher-rent areas are expected to see the largest decreases, with the capital region's annual growth rate expected to be only 2% this year.

According to Rightmove, more tenants have reached the limit of affordability. They predict a 5% increase in rents outside London this year, with a 3% increase in the capital region.

It's important to note that the above figures are averages, and significant differences may exist between different regions and types of properties.