Boost for renters as market ‘at best for six years’

Rental prices are rising much more slowly than before; This is good news for Millennials, Gen Zers, and anyone else struggling with housing costs.

Amid general pessimism in the property market – house prices falling and mortgage costs rising – Zoopla says competition to buy a rental home is at its lowest level in six years.

The rental price increased by 1.9 per cent year-on-year, down from 2.8 per cent previously, leaving the average monthly rent at £1,319.

This is down to an increase in the supply of rental properties, but a new north-south divide appears to be emerging.

Leading property website Zoopla says inquiries per property fell from 6.5 to 4.8 in the four weeks to March 1, compared with a year ago, and is now more than half the peak figures seen in 2022 and 2023.

Most importantly, wages are rising faster than rent prices.

However, the rental market in London remains incredibly challenging due to a lack of supply.

Tom Bill, Knight Frank’s head of UK housing research, said: “More balance has returned across the UK but there is still a significant undersupply in many areas in the capital, where renting is twice as common, driving up rents.

“While some landlords are already selling due to extra red tape and taxes, others are waiting to see how disruptive the Tenants’ Bill of Rights coming into force in May will be. With tougher green regulations also looming, further upward pressure on rents cannot be ruled out.”

Rental prices are actually falling in some UK cities. Zoopla thinks this is partly due to reduced immigration.

The latest ONS forecasts reveal that net migration to the UK peaked at 944,000 people by March 2023, slowing to 204,000 by June 2025.

Mortgages were getting cheaper until the war in Iran started. This also helped tenants get home loans, which freed up the number of homes for rent.

The annual rent for the average property outside London is now 33.5 per cent of a single person’s annual income. This is an improvement from 2023, when the rate was 35 percent, the highest in 20 years.

Rent growth remains stronger in more affordable markets in the North of England and Scotland; In some cities, increases of 3-4 percent are seen.

Liverpool and Newcastle recorded growth of 4.6 percent and 4.5 percent respectively.

By contrast, many cities in the Midlands and South are seeing lower or even negative price growth; Bristol is growing by 0.8 per cent and Cambridge by just 0.1 per cent.

Rents are falling in Birmingham (-0.7 per cent) and Nottingham (-0.8 per cent). Rents in London are rising at a relatively low rate of 1.7 per cent, with the average rent currently standing at £2,187.

Zoopla Chief Executive Richard Donnell said: “Market conditions for tenants are the best they have been in six years. The rental market is moving towards equilibrium as demand declines and more homes become available to rent. Tenants face less competition for homes and slower rent increases than in recent years. Local changes in supply and demand are causing rents to fall in some cities but this will only be a short-lived trend.”

Unfortunately, supply remains well below pre-pandemic levels; This means increasing the number of homes to rent is key to improving affordability for UK renters in the long term.

Harry Watts, lettings director at London agency Douglas & Gordon, said: “We are seeing a more mixed picture in central and south-west London.

“Although the market has become more stable compared to the 2022-23 peak, application registrations are still up 18 per cent so far this year compared to the same period last year, indicating continued demand for well-located, quality homes.

“At the same time, as we move closer to the Tenants Reform Bill, we are seeing more tenants being asked to move at points during the year, often at points they do not expect. In many cases this appears to be linked to landlords re-evaluating their position and in some cases choosing to sell, which is becoming more common.”

“And even where rent growth has slowed, there’s a clear affordability ceiling. Tenant incomes have struggled to keep up with pricing over the past few years, so while right-priced homes are doing well, anything ambitious is taking longer and facing sharper bargaining.”