UK rents soar by 8.3% in a year – Scotland leads the way

The UK’s rental market has seen a sharp rise in rents over the last year, with the average monthly rent reaching £1,220, according to property platform Zoopla.

This is an increase of 8.3% compared to a year ago, or £1,100 more per year for the average renter.

However, the pace of rental growth has slowed down from the double-digit rates seen in the previous two years, suggesting that the market is past its peak and may cool further in 2024.

The hotspot for rental inflation

Scotland has emerged as the hotspot for rental inflation, with rents rising by 11.1% in a year, despite the introduction of a 3% cap on annual rent increases for existing tenancies in September 2022.

Zoopla says this has led landlords to charge higher rents at the start of a new contract, to offset the limited rises during the tenancy.

The average rent in Scotland is now £790 per month, £82 more than a year ago, and the highest in the UK after London, where rents stand at £2,119 per month.

‘Expect Scotland to see faster rental growth’

Zoopla’s senior property researcher, Izabella Lubowiecka, said: “We still expect Scotland to see faster rental growth than anywhere else in the UK in 2024.”

She adds that renter demand in a market with a low supply of homes to rent has helped fuel rent rises for the past three years.

Ms Lubowiecka said: “Rental growth is also impacted by earnings growth – a strong jobs market and subsequent wage rises keep demand high and means tenants can weather rent increases.

“In the last year, higher mortgage rates have also impacted rents as they’ve prevented more would-be first-time buyers from owning a home and boosted demand for rental homes.”

Rents have reached an affordability ceiling

London has seen the slowest rental growth, at 6.8%, as rents have reached an affordability ceiling for many renters.

Zoopla attributes the high rental inflation to a combination of factors, including strong demand from renters, limited supply of rental properties, rising wages, and higher mortgage rates that have deterred some potential first-time buyers from entering the housing market.

Ms Lubowiecka said: “We believe that the rental market is now past peak rental growth after starting to cool in the final months of 2023.

“We expect a further slowdown in rental growth in 2024 as worsening affordability keeps demand in check and supply improves slowly.

“There are already signs asking rents have overshot in some of the most expensive markets that are showing resistance to higher rents.”

She adds: “Slower increases will be welcome news to renters who have often faced steep hikes in the last two years.”

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