"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"
- Tim Bannister - Rightmove
Rightmove's latest research and data have revealed that the average advertised rent for new properties coming onto the rental market has hit another new record outside of London of £1,280 per calendar month.
However, despite a 16th consecutive record in newly advertised rental prices, this quarter’s rise of just two pounds (+0.2%) is the smallest since this time in 2019 before the pandemic.
Advertised rents outside of London are now 9.2% higher than last year, which whilst still a significant annual increase, is the lowest rents have been compared to a year ago since 2021.
It’s the same story in the capital, with rents in London reaching a new record of £2,631. However, this is just four pounds (0.2%) higher than the previous quarter, as the yearly increase in rents in London halved from 12% last quarter to 6% now. This is the first time London rent rises have been in single digits versus a year ago since 2021.
The early signs indicate that the annual pace of rent growth will slow further in 2024, and Rightmove predicts rents to be 5% higher outside of London by the end of 2024 and 3% in London.
One of the main contributors to the slowing of rent rises, and the anticipation of a further slowdown in 2024, is an improvement in the balance of supply and demand in the rental market.
The trend of supply improving and tenant demand easing has continued at the start of 2024.
The number of tenants sending enquiries to letting agents to move is 13% lower than the same period last year. At the same time, the number of new rental properties coming onto the market is 7% higher than last year.
To put this into perspective, the average number of enquiries agents are receiving for every available rental property is currently 11, which while still nearly triple the four at this time in 2019, is down from 14 in 2019.
The market is still very busy compared to pre-pandemic levels. However, these early signs suggest a better experience for many tenants trying to secure a rental property in 2024.
There are also signs that more tenants are beginning to hit an affordability ceiling, further contributing to slowing rent rises.
23% of rental properties now see a reduction in advertised rent by the landlord, markedly up from the 16% at this time last year, suggesting the initial advertised rental price in some areas is increasingly out of reach for some tenants.
Rightmove’s Tim Bannister says: “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."
Christian Balshen, Rightmove’s lettings expert adds: “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.”