UK rent growth slows after hitting price peak

UK rent growth slows after hitting price peak

0:03 AM, 12th December 2023, About 5 months ago 1

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The UK’s rent price growth is cooling down after reaching its highest point in three years with one prediction that rises will drop from 9.7% to 5% in 2024 – the lowest since September 2021.

The prediction comes from Zoopla, and it attributes the slowdown to a combination of factors, including a decline in demand due to worsening tenant affordability, a gradual increase in supply as new investment recovers from the pandemic, and more regulation and higher mortgage rates for landlords.

The platform’s report also identifies some regional variations in the rental market, with London expected to lead the slowdown and Scotland continuing to see strong growth.

‘UK is past peak rental growth’

Zoopla’s executive director, Richard Donnell, said: “The UK is past peak rental growth which will be welcome news to renters who have seen rents rise by almost a third (31%) over the last three years.

“London will lead the slowdown, acting as a drag on the UK growth rate.

“The rental market has been stuck in a period of static supply and strong demand which has pushed rents higher.”

He says a strong labour market has driven strong rent price growth, along with record immigration and higher interest rates making it harder for first time buyers to buy a home.

Private rented sector will be more balanced

Mr Donnell also says the supply imbalance won’t improve next year but the private rented sector will be more balanced than it has been over the previous three years.

He added: “The slowdown in rental growth over 2024 will be down to a weaker labour market, slower earnings growth and growing affordability pressures limiting the pace at which rents can rise, particularly in southern England.

“Rents have room to rise above the UK average in regional cities where affordability is less of a constraint, but this won’t be the case indefinitely.”

Rents in the capital have reached a ceiling

In London, rents for new lets are currently 9% higher than a year ago, but Zoopla expects them to rise by just 2% next year and warns that rents in the capital have reached a ceiling.

The report highlights a growing trend of listed rent prices being reduced by more than 5%.

In contrast, Scotland is bucking the UK trend, with rental growth still accelerating and this is probably down to rent controls and high demand.

Edinburgh and Glasgow have the highest rent growth rates among UK cities, at 15.2% and 13.2% respectively.

The UK average rent stands at £1,201 per month, with the highest rents in London (£2,049), Oxford (£1,611) and Brighton (£1,565).


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Comments

GlanACC

11:13 AM, 12th December 2023, About 5 months ago

I have to agree. Its alright jacking up the rent but can the tenant afford it. There comes a point when the tennant says sod it and stops paying altogether (would you pay £900 for a 2 bed or £1300 for a 3 bed ?), in the full knowledge that it will be at least a year before any legal challenge will get them evicted. At which point they suddenly develop mental health issues or a cough due to mould.

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