UK rent prices have dropped for a third consecutive month, with the biggest value of decreases noted since the autumn of 2020, the latest HomeLet Rental Index shows.
The data, which is released monthly and analyses archived rents to paint a general picture of the UK market, shows that rents have fallen by an average of 1.3% over the past quarter, with the biggest drop recorded in London, down 2.2% during that period.
But the Midlands – both East and West Midlands – have reported rent hikes, unlike the rest of the country this month.
Although the current downward trend in rental prices will go some way towards mitigating defaults and taking pressure off the average renter, the wider context is that rental prices are still 7.51% up since February 2023, and 18.4% higher since February 2022; the equivalent of £200 per calendar month (pcm) more in two years.
Professionals believe this is not concurrent with wage increases, leaving many more out of pocket now than they were in a post-Covid Britain. This is reinforced by the company’s exclusive data on rent-to-income ratio, which suggests the average renter pays 33.5% of their wages on rent; a 2.2% variation since January 2023.
Andy Halstead, HomeLet & Let Alliance CEO has mixed feelings about the latest data.
He said: “Now is not the time to get carried away with these marginal improvements. On the one hand, it’s great to see rent prices continue to fall month on month, and by the biggest volume in years. But on the other hand, we also know the market and are well aware of the external factors that may impact it in the coming months.
“The Spring Budget approaches, and it will be interesting to see what the Conservative party announces to support landlords and tenants – if anything at all. Recent news suggests the likelihood of policies designed to curry favour with voters ahead of the election later this year. But we believe rebuilding the housing industry after the financial battering it has undergone in recent years should be a major priority.
“Though we can absolutely be positive about the short-term gains we have reported this month, it’s not time to celebrate just yet. By all means, view this month’s figures with optimism, but we need to take it with a massive pinch of salt and hope that the declines remain steady.
“Of course, marginally lower rents put slightly more money in tenants’ pockets and partially reduce the likelihood of defaults, but the broader landscape is still incredibly challenging for all parties – with little sign of easing. In fact, following last year’s trajectory, it is entirely possible that rents could be 5% – 10% higher by this time next year.
“Unless we see some dramatic changes to the economy, 2024 looks set to bring more of the same. Landlords will have to do battle with a familiar array of struggles, including rising costs and prohibitively expensive buy-to-let mortgage rates. Can the government turn it around? Only time will tell.”
