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UK Rental Prices to Sustain Upward Trajectory

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    Rental Growth Slowing But Still Significant in UK Property Market

    The UK housing market has seen an unprecedented rise in rental prices in the last few years, influenced by higher interest rates pushing would-be buyers into the rental market and increasing demand for homes.

    New insights have shown that rental prices will continue to stay high, albeit at a slighter rate than in 2023.

    Let’s look at the most recent expert analysis of the UK buy-to-let rental market in more detail.

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      What Does the Rental Market Look Like According to the Data?

      According to the most recent data, the UK rental market is seeing an inflation slowdown.

      Managing Director of Fine & Country Nicky Stevenson comments: “Rental growth has moderated to +7.5%, a decrease from +9.8% recorded a year ago. The cooling trend in rental inflation is evident across the UK, with London witnessing the most substantial deceleration.

      “Despite a slight uptick of 0.9% in rents in March, based on Hometrack data, rental demand has diminished by a fifth over the past year. Contributing factors include the waning effects of the pandemic, a slowdown in the labour market, and enticing lower mortgage rates for first-time buyers, as reported by Zoopla.”

      While this may seem negative, the demand-supply imbalance is still significant, which indicates rental prices should sustain their current upward trajectory. Still, rental supply is rising, growing by 29%, according to the latest Propertymark Housing Insight Report. This suggests buyer activity is increasing among buy-to-let investors, indicating that the UK property market has turned the corner following a difficult 2023.

      Stevenson points out a reduction in void periods during February 2024, falling from 22 days to 18 days. Every UK region apart from the South West saw shorter void periods, according to Goodlord.

      With rental prices growing by 29%, many properties are slipping into higher price brackets. Zoopla data reveals that 51% of all UK rental properties are found in areas where the average rent surpasses £1,000 per month. The RWinvest team have put together a guide on where to invest money to get a monthly income, which our readers should find useful.

      Find Out More: Check out our guide on the running costs of a buy-to-let to help improve your property business plan.

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      What Is the Takeaway Regarding Rental Growth in the UK?

      Stevenson concluded: “The evolving dynamics of the UK’s rental market underscore the resilience and adaptability of the sector amidst changing economic landscapes. The moderation in rental growth, combined with a significant increase in supply, offers a glimmer of relief for tenants.

      “However, the persistent demand-supply imbalance remains a dominant force, ensuring that the upward pressure on rents persists. As the market continues to mature post-pandemic, we anticipate further adjustments to cater to evolving tenant needs and preferences.”

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      Dale Barham

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      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.