Rents start falling in major cities as rental inflation slows

Rents in major UK cities are beginning to fall for the first time in years – the pace of rental inflation is now at its lowest level in nearly three years.

According to research from Zoopla, cities like London, Brighton, Glasgow, Nottingham and Worthing have seen a decline in rents.

Plus, a third of London’s boroughs have also experienced a similar trend.

Across the UK, rents are expected to rise by only 3-4% in 2024, a significant drop from the double-digit increases seen in 2022 and 2023.

‘We’ve passed peak rental inflation’

Zoopla’s executive director of research, Richard Donnell, said: “Rents have been rising faster than earnings for the past three years but they are now increasing at their slowest pace since 2021.

“In news that will be welcomed by under-pressure renters looking to move, this is a clear sign that we’ve passed peak rental inflation.

He adds: “Demand for rented homes has fallen by 39% over the last year, albeit off a high base, and the rental market has moved from ‘red-hot’ to still ‘hot’.

“Our data shows there are 17 people still chasing every home for rent, which is double the pre-pandemic average seen between 2017-2019.”

Rental market remains competitive

Despite the decline in demand, the rental market remains competitive, with 17 people still chasing every home for rent.

However, the supply of rental homes available per letting agent has slowly started to increase, thanks in part to corporate landlords and more renters becoming first-time buyers.

While the general availability of homes for rent remains a challenge, rents for new lets have risen by only 1.6% in the past six months, the lowest increase since 2021.

This slowdown is primarily due to affordability pressures.

Supply and demand are impacting rents

Changes in supply and demand at a city and local level are impacting rents to different degrees and factors like a slowdown in overseas student applications, a weaker labour market, and falling mortgage rates are all contributing to the weakening demand for renting.

In some cities, rents have risen so rapidly that they have ‘overshot’ what renters are willing to pay, leading to a decline in rents.

However, rents are still rising quickly in some cities, such as Bradford and Liverpool.

Overall, rents are rising fastest in accessible suburbs, larger cities, and areas where rental properties still offer good value for money.

London remains the UK’s most expensive rental market, with an average monthly rent of £2,172.

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