Rents Are Still Rising – But the Rental Market Is Changing

For anyone renting a home, the last few years have been particularly difficult. Rents have risen sharply, competition for good properties has been intense and, in many areas, simply finding somewhere suitable has been a challenge.

But new figures reported by the BBC, using research from Zoopla, suggest the rental market is beginning to change.

The headline is that rents are still rising – but increasingly, where you live makes a considerable difference.

Zoopla’s research shows that average UK rents have risen by around 2.1% over the past year, considerably slower than the increases we became accustomed to during the post-pandemic rental boom.

The average UK rent for a new tenancy now stands at around £1,321 per month.

However, that national figure hides some very different regional stories.

The affordable areas are seeing the biggest increases

Perhaps the most interesting finding is that some of the strongest rental growth is now happening in parts of the country traditionally considered more affordable.

In areas where average rents are below £750 per month, Zoopla found rents increasing by around 5% a year – more than twice the national average.

Carlisle, for example, has recorded rental growth of more than 9%, while Kilmarnock and Halifax have also seen substantial increases.

At the opposite end of the scale, rents have actually fallen in some higher-cost locations, including Bournemouth, Nottingham and Birmingham.

It appears there is a ceiling to what tenants can afford.

More choice – but still not enough homes

There is another encouraging sign for tenants.

The number of enquiries being received for each available rental property has fallen to its lowest level for six years, suggesting some of the extraordinary competition of recent years is beginning to ease.

Wage growth has also been running ahead of rental inflation, which should gradually improve affordability.

But there remains one major problem: supply.

According to Zoopla, every UK region and country still has around 20–30% fewer

homes available to rent than before the pandemic.

And that is important.

If landlords continue to leave the sector without sufficient new investment replacing those properties, the fundamental imbalance between supply and demand remains.

What does this mean locally?

Here in Surrey and Hampshire, affordability has always played an important role in the rental market. We are unlikely to see exactly the same pattern as some of the lower-priced areas highlighted in the national figures.

But the underlying message is relevant.

Tenants may gradually find themselves with a little more choice and slightly less frantic competition, while landlords can no longer necessarily assume that substantial rent increases will simply be absorbed by the market.

For landlords, that makes realistic rental pricing, presentation and choosing the right tenant increasingly important.

And for tenants, while nobody would describe renting as inexpensive, there are at least signs that the extraordinary pace of rental increases seen over recent years is beginning to moderate.

The rental market isn’t suddenly becoming cheap.

But it may finally be becoming a little more balanced.

Source: BBC News, reporting on Zoopla rental-market research.

Adrian Jones