A staggering 25% increase in rents from this year to 2026 is being predicted by a leading letting and estate agent.
Hamptons says that all regions will experience a surge in rental costs - after years of hefty price rises.
According to the forecast, excluding London, this year will see a notable 8% rise in rents, followed by a 7% increase next year.
The trend continues with a 5% increase projected for 2025 and another 5% for the year after.
In the capital, renters will face a 9% increase this year, followed by 8% in 2024, 4% the year after and in 2026, another 4%.
'Quest to quell inflation has hit the rental sector'
Hampton's head of research, Aneisha Beveridge, said: "There's a strong argument that the Bank of England's quest to quell inflation has hit the rental sector harder than any other part of the housing market.
"A build-up of long-term supply issues combined with soaring landlord costs is putting upward pressure on rents.
"And it's hard to see any of these pressures receding any time soon, which is why we expect rents to continue rising over the next few years."
Hamptons' data indicates that rents for a newly let property outside of London grew by 9.9% in July – that marks the 27th consecutive month of rent rises of more than 5%.
The growing shortage of homes to rent and increasing expenses for landlords will see rents continue rising and lead to affordability issues for growing numbers of tenants.
And the firm's report highlights a concerning trend that saw a 43% drop in rental home availability in Great Britain in July compared to the same month in 2019.
Landlords with buy to let properties with a mortgage
The fate of 68% of private rental sector landlords with buy to let properties with a mortgage will depend significantly on potential interest rate rises.
Hamptons predicts that larger rises in rents for 2023 and 2024 will occur as landlords transition from fixed term buy to let mortgage deals to much higher mortgage payments.
Consequently, the average rent for homes is anticipated to reach £1,550 per month – or £333 more compared to December 2022.
But despite the rise in rents, some landlords may find themselves materially worse off as rates rise.
'Rental growth will be led by the North of England'
Ms Beveridge says: "We think rental growth will be led by the North of England and London over the next year.
"These are places where larger portfolio landlords, which are more likely to be reliant on some form of finance, are most active."
She added: "London is also the lowest yielding region in the country on average, and so landlords here have less ability to absorb higher costs."
Ms Beveridge continued: "However, steeper borrowing costs are not the only issue, with substantial regulatory reforms on the horizon.
"The Renters Reform Bill is likely to further add to landlords' costs, and more regulation may well be in the pipeline whichever party wins the general election."
2.5% decline in house prices
Hamptons also anticipates a 2.5% decline in house prices in the last quarter of this year, which is equivalent to a 7.4% annual drop in prices when accounting for inflation.
The report is based on the house price index published by the Office for National Statistics (ONS) which suggests that while falling house prices will end next year, there will be no growth.
Hamptons says that by the end of 2025, prices are expected to rise by 3%, with a 5% increase projected in the final quarter of 2026.
The data reveals that, considering inflation, by the end of next year, average house prices will have fallen by nearly 10% from the start of 2023.
However, a new property cycle will start in 2025 and London looks set to outperform all other regions with a 5% annual price rise.
'Report from Hamptons makes for interesting reading'
The managing director of Accommodation for Students, Simon Thompson, said: "The report from Hamptons makes for interesting reading - and none of it good.
"Tenants face even higher rents which means affordability will become an ever-increasing issue.
"And the predicted fall in house prices will also be a concern to many landlords."
He added: "The end result is that higher rates for BTL mortgages and falling house prices mean that the figures simply won't work for lots of landlords to remain in the sector.
"I've said it before, and I'll say it again: the government needs to step in and help the private rented sector as a matter of urgency, so people have somewhere to live."
