Thousands of families across the UK are are renting smaller homes than they were three years ago, a new BBC report reveals.

With rental prices rising sharply and availability squeezed, many renters, particularly those aged over 30, are more likely to move to cheaper areas, Dataloft figures, based on a sample of between 4,807 and 6,732 new tenancies, also show.

Rents have been rising at a rapid rate, and look set to increase further in the near term as demand continues to heavily outweigh supply.

Dataloft estimates, analysed by the BBC, suggest almost half of new tenancies taken on by families earning £30,000 to £70,000 in the first six months of this year were for one or two-bedroom homes.

In the first half of 2020, during the period covered by the first national lockdown, 57% of new tenancies signed by families on £30,000 to £70,000 a year were for homes with at least three bedrooms, according to Dataloft.

In the same period of 2023, that figure had fallen to less than 51%. That means thousands more families a year taking on smaller properties than in 2020.

Sandra Jones, managing director of Dataloft, said: “We believe these reductions in renters’ standard of living to be the direct result of the severe supply constraint that has driven up rents.

“When affordability is stretched, as it is for so many today, people make trade-offs in order to stay within a budget.”

The data also showed about a fifth of people aged 30 to 39 would move to a higher priced area while more than a quarter would move somewhere cheaper. Among the under 30s, it was the other way around with just under a third moving to a higher rent location in the previous 12 months.

According to the 2021 census, four in 10 people who rent through a private landlord or agency are in two-bedroom homes.

Greg Tsuman, president of ARLA Propertymark, commented: “Fundamentally, the problem is that landlords are exiting the market when demand for rental properties continues to rise. Landlords are making a loss when rents are rising, and we need to address the root causes if we’re to solve this.”

A spokesman for the Department for Levelling up, Housing and Communities said the Renters Reform Bill which is going through Parliament would deliver “a fairer, more secure, and higher quality private rented sector”.

He said ministers were committed to “increasing the supply of social rented homes”.

In the Autumn Statement, chancellor Jeremy Hunt ended the freeze on the Local Housing Allowance, which has been in place since 2020. It determines how much help people who rent privately get towards the cost through housing benefit or universal credit. It will now be worth 30% of local market rents.