The average advertised rent for a home across Britain, excluding London, reached a record high of £1,280 per calendar month (pcm) in the fourth quarter of this year, according to Rightmove.
It marks the 16th consecutive quarter that average advertised rents have risen to a new record. But this quarter’s rise of just £2, or 0.2%, is the smallest since at 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 is the same story in the capital, with rents in London reaching a new record of £2,631pcm. However, this is just £4 (0.2%) higher than the previous quarter, as the yearly increase of rents in London halves 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.
Nearly a quarter – 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 said: “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 commentator, added: “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.”
Property industry reacts to The Rightmove Rental Trends Tracker
