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Rent Prices Break More Records in the UK Property Market

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    Rent Increases for 16th Consecutive Quarter in UK Housing Market

    Following an extended period of high inflation and interest rates, the housing market is finally returning to “normal” levels. Throughout most of 2023, the inflated cost of borrowing led to a subdued market, meaning fewer people were investing in property, and more people entered the rental market. This has led to unprecedented rental growth and higher gross yields for buy-to-let landlords.

    This month, Rightmove has revealed that rental prices have again broken records, though rental growth is expected to come down as more people can afford to buy properties in 2024.

    Let’s look at the Rightmove data in greater detail and see what it means for UK buy-to-let property.

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      How Much Is the Average UK Rental in 2024?

      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.

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      How Did Rightmove’s Experts Respond to the Latest UK Rental Figures?

      Reacting to the latest Rightmove rental data, Rightmove’s Tim Bannister said:

      “The trend of rent growth gradually slowing continues, with an improvement in the supply and demand of rental properties having a big contribution to that. We can’t keep seeing double-digit rent rises every year as tenant affordability simply cannot keep up, and 2024 is the year we think there will be a much smaller increase in advertised rents of 5% outside of London and 3% in the capital.”

      Rightmove’s lettings expert, Christian Balshen, added:

      “We hope this trend of a better balance between supply and demand continues this year, but the reality is letting agents are still extremely busy compared to what we used to consider ‘normal’.

      “We’re seeing more evidence that many tenants are reaching the point where they can’t afford to pay any more in rent, which is leading to reductions in advertised rental prices and means some properties are staying on the market for longer.

      “The average time to find a tenant has ticked up from 19 days at this time last year to 22 days now. To reduce the risk of void periods, landlords will need to work closely with a local letting agent this year, who will have access to the latest market insights to back up their years of expertise.”

      For more rental market insights, dive into some of our helpful buy-to-let area guides:

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      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.