Rent Expected to Surge By 16% in UK Property Market

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New Data Suggests Rents Will Rise by 16% by 2030

The UK property market has seen considerable rental cost growth over the last few years, spurred by high inflation and interest rates forcing more people into the Private Rented Sector. As tenant demand increased, so did rents, notably as many buy-to-let landlords upped costs to cover higher mortgage payments.

While the UK economy is heading back towards pre-Covid levels, we could still see significant rental growth over the next five or six years, according to the latest research from Zero Deposit. This could be good news for those investing in real estate in the UK.

Let’s look at those figures in more detail and see how much rent investors could make on their UK buy-to-let investments.

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What Is the Current Rental Growth Forecast for the UK Housing Market?

According to recent long-term rental forecasts by Zero Deposit, the monthly rental expenses are projected to surge by 16% by 2030. This implies the typical tenant might witness this expenditure rise to £1,150 monthly. However, the anticipated increase in specific regions is even steeper, reaching up to 39%, thereby adding hundreds of pounds to the average monthly rental cost.

To arrive at these projections, Zero Deposit examined historical rental market data from the Office for National Statistics for each region in England. This data was then utilised to predict the potential average rental costs in 2030 based on past market trends.

Presently, the average tenant in England is paying £994 per month. This figure has escalated by 5% in the past year and 37% over the past decade.

London not only boasts the highest average rental cost at £1,873 per month, but this expense has also surged by 12%, equivalent to £201 per month, within a single year between 2022 and 2023. Learn about just why is buy to let a good investment in 2024 with our free guide.

The cost of renting has increased in every region of England between 2022 and 2023, which may have led to higher gross yields for many buy-to-let investors.

The forecast from Zero Deposit indicates that the challenges for those in the rental market are poised to intensify. London is anticipated to remain the least affordable area, with a projected 12% increase, adding £234 to the rental cost, resulting in an average monthly rent of £2,107.

However, the East Midlands is expected to experience the most substantial surge. Zero Deposit estimates a 41% increase – equating to £307 more per month – in the average monthly rental cost across the region by 2030. This surge could be attributed to declining stock levels, which have decreased by -1.4% since 2018. Significant rental cost increases are also expected in the South West, the East of England, and Yorkshire and the Humber.

Discover more: For more property investment insights, see our guide on safe investments in the UK or consult our article on how to buy property in the UK as a foreigner.

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How Did the Experts React to the Latest UK Rental Forecast?

CEO of Zero Deposit, Sam Reynolds, said the following: “Since 2013, the average rent across England has increased every year with the exception of 2017 and 2020 and the average tenant is now paying 37% more than they were a decade ago, an increase of £266 more per month.

“This is a huge jump and one that simply hasn’t been matched by growth in earnings, with figures from the Office for National Statistics showing that wages have increased by just 30% during the same time period. The imbalance between the two is putting tenants under an even greater degree of financial pressure, both on a month-to-month basis and regarding the initial deposit required to secure a rental home.

“The primary issue driving rental value growth is the insufficient level of stock available to quell the overwhelming demand for rental homes. This demand has only grown as the cost of homeownership has spiralled, and we’ve seen a greater acceptance of long-term renting as a lifestyle choice.”

Despite Zero Deposit talking about the insufficient stock levels in the UK property market, 2024 marks a solid increase in activity among buyers and sellers. For instance, Foxtons’ recent research showed a 25% year-on-year increase in new instructions in January 2024.

With mortgage rates coming down alongside inflation, more buyers are willing to take a chance on the market, particularly with more affordable properties than in most of 2023. With Knight Frank predicting that property prices may rise by 3% over the next 12 months, we may see more buy-to-let investors entering the market to take advantage of the considerable rental growth forecast by 2030.

For an expansive look at the UK property market, take a look at some of our most recent buy-to-let area guides:

Author

Dale Barham

Dale is a property content writer at RWinvest. Keeping a close eye on the UK property market, Dale helps our readers stay informed and up to date on the latest market news and statistics.