On average, 21 candidate tenants compete for each rental property, according to the latest figures from Zoopla.
According to the latest rental market report, the number of properties available for rent is 24% below the pre-pandemic average.
Average rents rose by 5.4%, from around £1,182 per month in July 2023 to £1,245 per month in July this year.
The annual growth rate is half the rate of a year ago, but the lack of available homes remains a significant challenge for renters, Zoopla warns.
It says that while the number of properties available to rent is almost a fifth higher than last year, this is at a low level and supply remains well below pre-Covid levels.
Locations outside major cities, which remain more affordable than rent in central cities, are now experiencing double-digit rental growth.
In England, rental prices have risen sharply year-on-year in Wolverhampton (12%), Oldham (11%), Darlington (10%) and Walsall (10%), all areas adjacent to major cities with higher rental prices or good connections for transport and access to cities further afield.
In Scotland, Kilmarnock (13%) and Kirkaldy (12%) have seen the highest rent increases, amounting to 25-35% of the average rental price in Glasgow.
Zoopla predicts that the imbalance between supply and demand for rental properties will continue until 2025.
Executive Director Richard Donnell said: “The slowdown in rental inflation is driven by a lack of rental housing and continued strong demand, driven by the unaffordability of homeownership.
“Rent inflation is slowing in some major cities where rents are high, but they are still rising rapidly in more affordable areas.
“Any new policy or tax changes that result in a reduction in supply will simply push rents up, hitting low-income renters the hardest.
“It is essential that policymakers focus on increasing the supply of rental housing as the key route to slowing rental inflation and improving choice for renters.
“As things stand now, the growing unaffordability of rents is the only route to slower rent increases.”
Benham and Reeves managing director Marc von Grundherr says: “There remains an incredibly high demand for good rental properties and we simply don’t have the supply reaching the market to meet this demand.
“As a result, properties are being rented out at an extremely rapid pace and this imbalance between supply and demand is driving rental prices higher and higher.
He says the problem is likely to persist as landlords are deterred from investing by the government’s rent reforms and tax changes expected in the autumn statement.
He added: “Doing this is likely to reduce the level of quality rental housing even further and while the exodus of landlords may be somewhat exaggerated, we already need more homes at the moment and so any further reduction in stock will only but produce more homes. causing the rental crisis to worsen.”
Nathan Emerson, CEO of Propertymark, said: “The rental market has suffered from a lack of supply against ever-growing demand for a worryingly long period.
“The housing sector is seeing problems escalate year on year and the real effects are that tenants face an increasing challenge in securing suitable premises for their needs.
“With tax changes and additional obligations being imposed on many landlords, plus increases in general living costs and mortgage repayments, this is putting extreme pressure on operating costs.
“This, against the backdrop of the introduction of the Renters’ Rights Bill, has the potential to add further uncertainty to the mix for current and potential investors and contribute to worsening already worryingly low supply levels.
“It is important that any new legislation is introduced with a balanced and fair approach for all parties involved to encourage long-term investment in the provision of quality housing in areas that desperately need it.”
However, tenant campaigners argue that reforms are long overdue and could go some way to helping.
But they say the government must go further.
Generation Rent chief executive Ben Twomey said: “The bill prohibits planned, unaffordable rent increases from being written into contracts, but we remain vulnerable to backdoor evictions.
“The proposed blanket ban on landlords pitting tenants against tenants in bidding wars cannot come soon enough, but if landlords are allowed to continue with uncontrolled and unaffordable rent increases, thousands of us will still be forced into poverty and onto the streets.”