"Market remains out of balance and difficult for tenants"
The average advertised rent for new properties in the UK has reached a new quarterly record, with the average price outside of London now at £1,314 per calendar month (pcm), according to property listing platform Rightmove.
Its Rental Trends Tracker for Q2 2024 shows average rental prices are 7% higher than a year ago, down from a peak increase of 12% in 2022. In London, average advertised rents have also hit a new record of £2,661, a 4% rise from last year, compared to a peak of 16% in 2022.
While the overall balance between supply and demand has improved in the second quarter, the rental market remains busy compared to pre-pandemic levels.
The number of enquiries each rental property is receiving from prospective tenants has dropped to 17 from 26 last year, but this is still more than double the eight enquiries recorded in 2019.
The slowdown in enquiries per property is due to an increase in available rental properties and fewer tenants looking to move. The number of available properties is currently 14% higher than this time last year, while tenant demand has decreased by 16%.
However, the number of available homes to rent is still 20% below 2019 levels, and 22% more tenants are looking to move compared to 2019.
A recent Rightmove study indicates that around 120,000 more rental properties are needed to bring rental price growth back to pre-pandemic levels of 2-3%, based on current demand.
There have been positive signals from the government regarding improvements in the rental market. Labour has pledged to build 1.5 million more homes, which could increase the availability of rental properties if some are allocated to the private rented sector, or enable more tenants to become first-time buyers.
Rightmove is also advocating for further government support for landlords to encourage investment in the private rented sector, particularly in making properties more energy efficient. It added that a balanced approach that recognises the importance of landlord investment is essential to providing tenants with a wider choice of higher-quality homes.
“With 17 enquiries for every available rental property, the market remains out of balance and difficult for tenants,” said Tim Bannister (pictured), director of property science at Rightmove. “We need landlord investment to increase stock and help achieve a healthier supply and demand balance in the market.
“There is an opportunity to encourage landlords to continue to invest in good quality homes, for example through tax changes, incentives to help with energy-efficient upgrades or a general sentiment change in government towards working alongside and with landlords.
“Landlords have previously told us that the government’s perception of landlords is one of their main concerns about the sector. Support for both tenants and landlords will be key to achieving long-term stability in the rental market.”
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