UK rent growth slows to lowest rate in 30 months – Zoopla

The UK’s private rented sector (PRS) is experiencing a slowdown in rent growth at 6.6% – the lowest increase in 30 months.

According to Zoopla’s latest Rental Market report, despite the fall in growth, competition for rented homes remains high and rent growth for this year will drop to 5%.

The platform says there are still 15 potential tenants for every rental property, more than double the pre-pandemic average.

This is down to a lack of available homes – which is a third fewer than pre-pandemic levels.

Zoopla also says that while there hasn’t been a mass exodus of landlords, new investment has been low.

‘Rents continue to grow faster than average earnings’

Richard Donnell, the executive director at Zoopla, said: “Rents continue to grow faster than average earnings although the gap is much narrower than a year ago.

“Rental demand continues to run well ahead of available supply which is keeping the upward pressure on rents but there are some areas where rental growth has stalled.

“The number of private rented homes has been static since 2016 which has compounded the rise in rents over the last three years.”

He says that boosting the supply of rented homes, both private and affordable, should be a top housing priority for the next Government.

Mr Donnell added: “More supply is the fastest route to easing the pressure on renters and improving the overall quality of rented homes.”

Some cities have even seen rent price drops

Zoopla says that some cities have even seen rent price drops, including Nottingham, Brighton, York, Glasgow, Cambridge and London.

This trend is pointing to a shift in rental market dynamics in some areas.

London shows a clear inner/outer divide with rents in central areas growing the slowest, while outer areas with lower average rents saw double-digit increases.

The average rent in the capital is £2,122, while the UK average is £1,226.

Gap between rental growth and average earnings

While the gap between rental growth and average earnings is narrowing, the financial burden of rent varies greatly.

The report reveals that Londoners spend the highest proportion of their income on rent, while Scotland has the lowest.

This explains why rents are rising fastest in areas where housing costs are more affordable.

The lack of rental property supply is also a key factor in affordability concerns, though the number of private rented homes has remained steady since 2016.

Number of private rented homes on the market

Propertymark’s chief executive, Nathan Emerson, said: “Our member agents have told us for years of the growing disparity in the number of private rented homes on the market in comparison to the rising demand from tenants.

“As legal and financial obligations increase for landlords, it’s no surprise that many are turning elsewhere to invest their money.

“A priority for the new government should be to support and incentivise landlords to invest, not to deter or penalise them like we’ve continued to see in the past.”

He adds: “We want to get rent levels back down to sensible and affordable levels for the nation, and without a boost in supply, this is unlikely to happen.”

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