Rental growth in the UK has slowed to its lowest level in 33 months, according to the latest market analysis from property website Zoopla.
Demand for rental properties has fallen by 39% in the past year and Zoopla expects the rental market to move from ‘red hot’ to ‘hot’.
Rents for new lettings have increased by 5.7% over the last 12 months to June 2024. The average rent in the UK is £1,232 per month, an increase of £66 per month compared to the same period last year.
However, rents have fallen in several major UK cities in the first half of 2024, including Nottingham (-0.6%), London (-0.4%), Brighton (-0.2%) and Glasgow (-0.2%). Zoopla’s rental index tracks rental growth in 64 cities across the UK, and in 75% of these cities, the rental growth rate is lower
While rents have overshot the mark in some areas and are adjusting, they continue to rise at an above-average rate in cheaper markets near major cities and where renting still offers better value.
For example, Rochdale (+6.9%), Doncaster (+5%), Southend (+5%), Sunderland (+4.4%) and Telford (4.3%) all recorded rental growth of over 4% in the first half of the year.
A similar pattern of rental growth can be seen across all London boroughs, with rents falling in inner areas, particularly Tower Hamlets, Newham and Greenwich.
In over a third of London’s boroughs (12 out of 33), rents have fallen in the first half of 2024 and are significantly below the previous year’s level. Rents are lower in the outer boroughs of London, which explains the above-average rental growth rates in the first half of the year.
The supply of homes available for rent per real estate agent is slowly increasing. While agents have 17% more homes available for rent than a year ago, the average letting agent still has a third fewer homes available for rent compared to the pre-pandemic average (2017-2019).
The slight improvement in supply is due to two factors. Lower mortgage rates have made it slightly easier for first-time buyers to purchase a home and give up renting life, and more new homes are being sold to let to commercial landlords.
In addition, a small but significant number of private landlords continue to sell rental properties despite the changing business environment and rising mortgage rates, which has a negative impact on the overall number of properties available for rent.
Commenting on the latest figures, Richard Donnell, managing director of Zoopla, said: “Rents have risen so quickly that they have exceeded peak prices in some cities. We are also seeing slight declines in rents in some cities as rents adjust to weaker demand and slightly increased availability of rental properties.”
He added: “Rents are expected to rise by 3-4% in 2024. This is more than half of last year’s levels and below income growth, providing some relief for private renters in the UK.”
