50,000 rented homes needed to help ease shortage

The UK’s rental market continues to face a significant supply shortage, and despite recent signs of improvement 50,000 homes are needed to bring supply back to pre-pandemic levels, Rightmove says.

While average advertised rents have hit record highs, the pace of rent growth is slowing down, offering some relief to affordability-strained tenants.

According to the firm’s latest data, the average advertised rent outside London now stands at £1,291 – that sees 17 consecutive months of record highs.

It also represents an 8.5% rent increase compared to the same period last year.

‘Rental market is no longer at peak boiling point’

Tim Bannister, the firm’s director of property science, said: “The rental market is no longer at peak boiling point, but it remains at a very hot simmer.

“Looking at data across the whole market, we can see some slow improvements for tenants with more choice, and competition with other tenants slowly starting to ease.

“However, tenants may not feel the benefit of some of these improvements in their local market, as the balance between supply and demand remains so far from pre-pandemic levels.”

He added: “The fact that even with some improvements to the level of supply, we are still nearly 50,000 properties behind the pre-pandemic market, is a stark reminder that the industry needs more good quality rental homes, and we need to encourage investment from landlords to provide them.”

The pace of rent growth has slowed down

However, Rightmove says the pace of rent growth has slowed down for the second quarter in a row, suggesting a potential cooling down of the market.

London also saw record-breaking average rents, reaching £2,633 but the growth rate has significantly slowed down to 5.3% compared to last year.

That’s in stark contrast to the peak of 16.1% in Q3 2022.

Despite the positive signs, the rental market remains far from balanced.

The platform’s data reveals a significant gap between supply and demand, with nearly 50,000 properties needed to bring the market back to pre-pandemic levels.

Number of available rental properties has increased

While the number of available rental properties has increased by 11% compared to last year, it still falls 26% short of 2019 figures.

However, demand remains high, with the number of people searching for rentals down by 17% year-on-year but still 54% higher than pre-pandemic levels.

This translates to an average of 13 enquiries per rental property, significantly higher than the five enquiries seen in March 2019.

Tenant affordability is also being severely tested with the five-year high in rent reductions seen at this time of year.

Currently, 22% of rental properties have seen a rent reduction, suggesting landlords are adjusting their pricing to meet tenant affordability.

The largest homes, typically four-bedroom detached houses and above, are most affected by this trend, with a record-breaking 30% experiencing price reductions.

Share This Article