UK Rental Prices Hit Another Record High but Show Signs of Stabilization

In the final quarter of 2023, the average advertised rent outside London in the UK reached £1,280 per month, marking the 16th consecutive month of reaching record highs, according to a report from property site Rightmove. However, the increase was marginal at £2 (0.2%) compared to the previous quarter. Annually, advertised rents are 9.2% higher, signalling the slowest growth rate since 2021. Rightmove Director Tim Bannister noted that sustained double-digit rent increases are unsustainable due to tenant affordability challenges.

The report indicates that rising rental costs impact tenants' ability to secure new properties, prompting some landlords to adjust prices. The number of tenant moving inquiries to letting agents has decreased by 13% compared to the previous year. Despite the decline, agents still receive 11 inquiries for every available rental property, a drop from 14 in the same period last year but significantly higher than the four received in 2019.

One optimistic sign is the slow increase in the rental supply, with a 7% annual rise in properties entering the market. This increase might help stabilize rent prices, which have been rising due to high demand. Analysts are cautiously optimistic about the coming year, anticipating a better experience for tenants seeking rental properties in 2024.

However, Rightmove points out significant regional variations in the UK's rental market. London, for instance, reached a new peak with average rents at £2,631 in Q4 2023, representing a quarterly increase of £4 and a yearly rise of 6%. In contrast, the North East remains the most affordable region, with an average monthly cost of £865. Only three areas—Scotland, the South West, and the South East—saw decreases in average advertised rents in Q4 2023 compared to the previous quarter.

Looking ahead, Rightmove predicts a 5% increase in average rents outside London and a 3% rise within the capital in the coming year. Despite these trends, considering inflation and wage growth, housing affordability remains crucial in assessing the actual impact on tenants.