Rent Increases Slow Down to Lowest in Three Years

The UK rental market, which has experienced significant price increases over the past three years, is beginning to show signs of cooling, according to a report from Zoopla. While average rents for newly-let properties have risen by 5.7% compared to last year, the growth rate has slowed to just 1.2% in the first half of 2024. Notably, over one-third of London boroughs have reported falling rents, contrasting sharply with the previous year's trends. In outer London, however, rental growth remains robust, particularly in more affordable areas. In regions adjacent to major cities, rental prices continue to climb, with tenants in Rochdale experiencing a 6.9% increase in rents. Doncaster and Southend also saw rises of 5%. The overall supply of rental properties is gradually increasing, with estate agents reporting a 17% rise in available homes compared to last year. Despite this, the current inventory remains significantly lower—by a third—than pre-pandemic levels. The easing of mortgage rates has made homeownership more accessible for first-time buyers, prompting some to leave the rental market. However, the ongoing sale of rental properties by private landlords, driven by higher mortgage costs and regulatory pressures, is constraining the rental supply. Experts suggest that while rents are expected to rise by 3-4% in 2024, this is a marked decrease from previous years and may provide some relief for renters. Tom Bill from Knight Frank cautions that punitive government measures against landlords could exacerbate supply issues, potentially leading to higher rents as landlords exit the market. He emphasizes that while rental growth remains historically high, the balance between supply and demand is delicate and could shift further if landlords feel pressured by new regulations.