MHHG estate agents

The annual growth rate of rents for new lets has slowed to 6.6%, down from a peak of 16% in October 2021. Competition for rental properties remains intense, with 15 households vying for each rental home, more than double the pre-pandemic average. The supply of rental homes is increasing, with an 18% rise in the average number of homes available per estate agent compared to last year. Rental growth is expected to slow to 5% over 2024, with the average rent for new lets in the UK at £1,226 as of April 2024.

Rental inflation in the UK is at its lowest rate in 2.5 years. The average monthly rent has increased by £80 over the last year, reaching £1,226. The annual growth rate for new lets has decreased from 10% a year ago to 6.6%, the lowest since October 2021. If recent rental increases were annualized, the inflation rate would be 3%.

Although demand for rented homes is easing from pandemic highs, it remains high, with 15 households competing for each rental property. Rental demand has decreased by 25% over the last year, yet rental supply per estate agent has increased by 18%. Overall supply remains a third lower than pre-pandemic levels due to low investment in the private rental sector. Regionally, demand has dropped by up to 30% in areas like the East of England.

Regions like the North East and Scotland are experiencing higher rent increases at 9.5% and 9.3%, respectively. Some cities, including Nottingham, Brighton, York, Glasgow, and Cambridge, have seen slight rent decreases in the last quarter. The gap between rent increases and average earnings growth is narrowing, indicating a potential slowdown in rental inflation. Rent levels are influenced by strong demand and low investment in the private rented sector, with significant regional variations in affordability.

The imbalance between rental supply and demand is unlikely to improve significantly in the next year. Low investment in the private rented sector and above-average demand are expected to persist. Demand for rented homes is expected to moderate slowly as pandemic factors recede, but the high cost of home ownership and lack of affordable homes will continue to drive demand for rentals. The labour market and the need for student housing remain significant drivers of rental demand. While rental growth is slowing, persistent supply-demand imbalances and affordability issues will keep upward pressure on rents.