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Demand for rental homes in UK up by 23% in a year

Demand for rental homes across the UK has jumped by nearly a quarter in a year, research has found, piling more pressure on an oversubscribed market and pushing private record rents even higher.

The number of people enquiring about homes to rent is up 23% on this time last year, according to the property website Rightmove, driven in part by some would-be buyers putting their plans on hold in the hope that mortgage rates will drop in the new year.

That has, in turn, fed an increase in how much landlords charge, with separate research from the London estate agent Foxtons reporting rents in the capital in the first nine months of this year had risen 22% year-on-year, with the average rent now at a record £571 a week.

However, the cost and availability of mortgages have settled following a turbulent two months after the Liz Truss government’s mini-budget spread mayhem in the market, with indications that rates could drop further next year.

The average two-year fix has fallen from 6.65% in late October to 6.12%. Meanwhile, the average five-year fixed rate this week dropped below 6% for the first time since the mini-budget, according to Moneyfacts, and is now 5.92%.

Rightmove warned that mortgage rates would stabilise higher than buyers have been used to in recent years. The Bank of England is forecast to raise its base rate to 4.25% by next spring, although that is lower than once feared.

The jump has hardest hit first-time buyers in mortgage rates, especially those who were already financially stretched.

They are likely to find competition for a suitable rental home much fiercer than in the sales market, and choice more limited, Rightmove said. The number of smaller available rental homes – studios and one- and two-bedroom properties – is down by 4% compared with last year, while it is up 13% in the sales market.

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