Policy makers are being urged to focus on growing the stock of homes and those with empty properties are being urged to put them up for rent as demand from tenants remains at a high.
According to property portal Zoopla, there are now 21 people competing for every rental property.
The number of homes for rent is still 24 per cent below the pre-pandemic average, while demand has more than doubled.
Rental growth for new lets currently stands at 5.4 per cent, half the rate compared to a year ago, according to Zoopla.
Average rents stand at £1,245 per month in July 2024, £63 per month higher than a year ago.
A lack of supply remains a major challenge for renters due to low levels of new investment by private landlords.
The number of homes for rent is up by almost a fifth on last year off a low base, but the number of homes for rent is 24 per cent below the pre-pandemic average.
While rental demand has declined over the last year as one-off pandemic factors fade, mortgage rates fall and tighter visa rules reduce migration for study and work, there are still 21 people competing for every rental property.
Richard Donnell, executive director at Zoopla said: “The slowdown in rental inflation is being drawn out by a lack of homes for rent and continued strong demand, driven by the unaffordability of home ownership.
“Rental inflation is slowing in some major cities where rents are high but they are still increasing quickly in more affordable areas.
“Any new policy or tax changes that result in a reduction in supply will simply push rents higher hitting low income renters hardest.
“It is essential policy makers focus on growing the stock of homes for rent as the primary route to slowing rental inflation and improving choice for renters.”
