Rightmove’s recent findings and data indicate that the average monthly rent for new rental properties outside of London stands at £1,280. This marks the 16th consecutive quarter of record-breaking rental prices. However, this quarter’s increase is minimal at just £2 (+0.2%), the smallest since 2019 before the Covid-19 pandemic.
Outside of London, advertised rents have risen by 9.2% compared to last year, a substantial annual increase but the lowest since 2021. Regarding buy-to-let property in London, rents have hit a new high at £2,631, a mere four pounds (0.2%) higher than the previous quarter. Meanwhile, the yearly increase in London rents has dropped from 12% to 6%.
Early indications suggest a further slowdown in the annual pace of rent growth in 2024. Rightmove predicts a 5% increase in rents outside of London and a 3% increase in London by the end of the year.
However, buy-to-let landlords may see their gross rental yields increase over the next 12 months, particularly if they are purchasing new properties in high-yielding areas such as Liverpool or Manchester.
The balance of supply and demand in the rental market is a significant factor in the slowing rent rise. The trend of increased supply and reduced tenant demand continues into 2024. Tenant enquiries to letting agents have decreased by 13%, while the number of new rental properties on the market has increased by 7% compared to last year.
On average, letting agents receive 11 enquiries for every available rental property, down from 14 in 2019. Although the market remains busier than at pre-pandemic levels, these early signs suggest a more favourable experience for tenants seeking rental properties in 2024.
Affordability constraints are also contributing to the slowdown in rent rises. Currently, 23% of rental properties see a reduction in the rent advertised by the landlord, up from 16% last year. This indicates that initial advertised rental prices in some areas need to be more attainable for tenants. As such, landlords may enjoy success by investing in areas with good-value rents to attract tenants, such as the North West.
Read More: Want to know more about property investment? Check out our guides on buying property in the UK from overseas and buying a house through a company.