Rent price growth slows down – but rents will still beat inflation in 2024

The annual increase in rents for new lettings in Great Britain dropped to 8.3% in January, the lowest level since December 2022, research reveals.

According to a report by Hamptons, rent price growth has lost momentum since August 2023, when it reached a record high of 12%.

In December 2023, it was still at 10.2%, but in January 2024, it fell below 10% for the first time in six months.

The slowdown was mainly driven by London, where the rental growth halved from 17.1% in August 2023 to 8.1% in January 2024, the lowest rate in two years.

Only two regions, the East of England and the West Midlands, maintained double-digit growth in January 2024, compared to six regions in August 2023.

‘Fewer landlords have been putting up the rent’

Aneisha Beveridge, the head of research at Hamptons, said: “Last summer looks like it may have been the high watermark for rental growth. Since then, fewer landlords have been putting up the rent.

“Where they have, in cash terms, monthly increases have tended to be in double rather than triple figures.

“The scale of mortgage rate rises kickstarted two years of record-breaking rental growth.”

She added: “As landlords have rolled off fixed terms, they’ve been partly feeding these higher costs through to tenants in the form of higher rents.”

Ms Beveridge also says that rents in 2024 will continue ‘running ahead of inflation’.

Higher rent when re-letting their property

The report also shows that fewer landlords can secure a higher rent when re-letting their property.

In January, 59% of landlords achieved a higher rent than before, down from 81% in January 2022 and 79% in January 2023.

The remaining landlords either kept the same rent or lowered it.

The landlords who managed to increase the rent were mostly those who owned smaller properties, as they benefited from the higher demand for cheaper homes due to the cost-of-living squeeze.

In 2023, 83% of one-bed homes were re-let at a higher price, while only 67% of four-bed homes were.

In early 2024, however, the difference between the property sizes has narrowed, with similar rates of rent increases across all categories.

Supply of rental homes increased by 34%

The report also indicates that the supply of rental homes increased by 34% in January compared to the same month last year.

This is mainly because it takes longer to let a property, rather than a surge in the number of new rental listings.

However, the share of landlords who can achieve higher rents is still above the pre-pandemic average of 49%, suggesting that the rental market remains tight and competitive.

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