A strong jobs market is also fueling demand with more people moving in for work, while high interest rates have also kept many people in the rental market longer than usual as they are unable to buy, Donnell said.
David Miles, an economist at the Office for Budget Responsibility, backed Donnell’s suggestion that immigration plays a role in rates rising rapidly.
He told The Telegraph: “The recent high rates of rent increase may be related to increasing population and rapid growth in student numbers. “It would be weird if that wasn’t a factor.”
263,000 students moved to the UK in the year ending June 2023. Office for National Statistics figures show international students accounted for two-fifths of people who arrived from outside the EU in the year ending June.
“A lot of international students have come to the UK and that’s good, but there’s not enough student accommodation. So you get a huge increase in student demand for the private rented sector,” Mr Donnell said.
“They are more likely to settle in college towns and cities across the country, and they are more likely to rent,” said Anisha Beveridge, head of research at Hamptons International.
Ms Beveridge said it was only in exceptional circumstances that students’ parents would buy a property, “although this is still fairly common in prime central London for wealthier families”.
In London, the decline in immigration during Covid was one of the reasons why “rents fell so much during that period”, according to Ms Beveridge.
“The opening of borders and travel also coincided with a recovery in rents in the capital,” she said. However, some of this was also driven locally as people working from home returned to their offices.
Claims that overseas renters are fueling Britain’s affordability crisis will increase pressure on Rishi Sunak to cut immigration, with record numbers sparking a backlash from the Tory right.
The added pressure from rising migration rates comes at a time when the supply of homes for rent is also under pressure.
Regulatory and tax changes have made buy-to-let investments less profitable, meaning fewer new investors are entering the sector and existing owners are selling properties.
Donnell said one in 10 homes advertised on Zoopla are sold by owner.
“The total number of private rented homes in this country is stuck at 5.5 million, and has been for seven years,” he added.