Rents to rise by 3% as tenant demand exceeds pre-pandemic levels

The UK’s private rented sector remains competitive, with demand for rental properties outpacing supply, Rightmove says.

Its research reveals that the average number of enquiries per available property is nearly double pre-pandemic levels.

That’s despite a 7% rise in available properties and a 19% drop in prospective tenants compared to last year.

Each available property is currently receiving an average of 11 enquiries, compared to six in 2019.

In the summer, agents were receiving 19 enquiries per property.

‘Influencing rental price changes’

The platform’s property expert, Tim Bannister, said: “There are two competing factors influencing rental price changes right now.

“The ongoing imbalance between supply and demand is putting upwards pressure on prices.

“On the other hand, rent rises outpacing wage growth over the past five years has stretched affordability to extreme levels, and is showing in the increasing number of price reductions.”

He added: “Whilst at a top-level, we’ve seen overall improvements in the balance between supply and demand, agents tell us they are still extremely busy and having to manage high volumes of tenant enquiries.”

Slowest rate of rent growth

Average rents outside of London have risen by 4.5% and are now £1,339 – that’s the slowest rate of growth since 2021.

Rightmove predicts that average newly advertised rents will rise by 3% outside of London, and by 3% in London by the end of 2025.

It also says that letting agents are having to reduce the rents of more rental properties.

Apparently, 26% of rented homes have seen rents being dropped to attract a tenant – last year it was 23%.

The platform says that average UK rents have risen by 40% over the last five years, whilst earnings have risen by 28%.

Landlords face exiting the PRS

ARLA Propertymark’s president, Angharad Trueman, said: “The issue of demand far outstripping the number of homes available to rent is continuous.

“Landlords are also battling increasing costs including rising tax and mortgage costs, and many are finding it difficult to break even.

“The rental landscape continues to put pressure on investors and, ultimately, many are faced with the decision of exiting or considering exiting the market altogether.”

She adds: “Without incentives for landlords to enter or remain in the market, rent prices and stock levels are likely to continue to worsen.”

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