Rental market split as affordability pressures persist

The rental market continues to remain divided across the country, as supply and demand imbalances drive differing rental trends across regions.

Propertymark’s rental price and average salary tracker for August reveals, while rents have fallen, affordability constraints continue to put pressure on tenants.

The news comes as RICS reveals tenant demand continues to rise.

Rental markets continue to vary

According to the data, average rents fell in Scotland (-1.2%), London (-0.7%) and the South East (-1.8%) between July and August, while rents increased across the other regions.

The South East recorded the largest monthly fall in average rent, decreasing by 1.8%, while London saw rents fall by 0.7%. Despite this decline, London remains the UK’s most expensive rental market.

London continues to require the highest representative salary to secure an average-priced rental home, at £74,010. This is a 3.3% increase on the same period last year, showing the continued affordability pressures facing renters in the capital.

Kim Lidbury, President of ARLA Propertymark (Association of Residential Letting Agents), said: “The latest figures show that rental markets continue to vary considerably across the country, with rents falling in some regions while increasing in others. These movements reflect the underlying balance between supply and demand, as well as the availability and type of properties coming to market.

“Where demand continues to outstrip supply, competition for available homes can place upward pressure on rents. At the same time, landlords are operating in an environment of rising costs and significant regulatory change, all of which can influence the viability and affordability of providing rental homes.”

Encourage landlords to invest

Ms Lidbury adds more needs to be done to encourage landlords to remain and invest in the private rented sector.

She said: “While it is encouraging to see rents fall in some of the UK’s most expensive markets this month, affordability remains a significant concern for many renters. The longer-term solution is not simply to focus on rental prices, but to ensure there is a sufficient supply of good-quality homes to meet demand.

“Creating the conditions for landlords to remain in and invest in the private rented sector, alongside increasing the overall supply of homes, will be crucial to delivering a more stable and affordable rental market for tenants.”

The data also reveals affordability has improved in some regions over the past year, with the representative salary required falling by 1.2% in the North West and 3.7% in Yorkshire and Humberside.

The annual picture remains challenging for many renters, with Scotland (+2.1%), the East of England (+1.0%) and London (+3.3%) among the regions recording increases in the representative salary required to secure an average-priced rental home.