Zoopla Rental Market Report: June 2024
The average rent for new lets in the UK is £1,226 after a +6.6% rise in the last year. Rents for new lets will rise more slowly this year, but only a major supply boost will help with rental affordability.
By Richard Donnell, Executive Director, Research – Zoopla
Key Takeaways
- The rate at which rents are rising has slowed down to 6.6% for new lets, down from a high of 16% in October 2021
- London is leading the slowdown, with rents rising at just 3.7% in the last year, as rents start to fall in some cities
- Competition for properties remains high, with 15 households chasing every rental home (more than double the pre-pandemic average of six)
- However, choice is starting to increase, with the average number of homes for rent per estate agent up by 18% on this time last year
- We believe the rates at which rents are rising will continue to slow to 5% over 2024
The average rent for new lets in the UK is £1,226 as of April 2024 (published in June 2024). Rents have risen 6.6% in the last year, the slowest rate of growth in 2.5 years.
UK Rental Inflation – Lowest for 2.5 Years
UK Rental Inflation Lowest For 30 Months
- The average rent for new lets in the UK is £1,226 as of April 2024 (published in June 2024).
- Rents have risen 6.6% in the last year, the slowest rate of growth in 2.5 years.
- This is the lowest rate of annual rental price inflation for 30 months (since Oct 2021) as demand slows from a high base and affordability constraints among renters mean rents can’t rise much further.
- If the rental increases that took place in the last three months were converted into a yearly rate, the annual rate of inflation would be 3%.
- This is the lowest it’s been for the month of April since 2021, and points to a continued slowdown in the rate of rental inflation for the rest of 2024.
Demand weakens off a high base but supply remains low
- The chronic imbalance between rental supply and demand is starting to narrow but remains well out of kilter.
- Demand for rented homes is slowing off a very high base as one-off pandemic factors start to recede and mortgage rates fall below 5%.
- Rental demand is down 25% over the last year but competition remains high, with 15 households chasing every rental home. This is more than double the pre-pandemic average of just six which was seen between 2017-2020.
More choice of homes for renters
- The average number of homes for rent per estate agent has increased by almost a fifth (18%) on this time last year, which is boosting choice.
- However, the supply of homes for rent remains a third lower than the pre-pandemic period, as low investment in rented homes keeps the overall stock of private rented homes broadly flat.
- The national picture of lower rental demand and a modest increase in supply is replicated across all regions and countries of the UK.
- Demand is down by up to 30% across the East of England, followed by London (-28%), the South East (-27%) and Scotland (-27%).
- Traditionally, more rental homes become available during spring before demand kicks in between May and September each year, and supply is currently up the most in both London (23%) and Scotland (24%).
Supply-demand imbalance unlikely to improve
- Looking ahead, we do not believe that the imbalance between rental supply and demand will improve materially over the next 12 months.
- Levels of new investment in the private rented sector remain low, while demand is set to remain above-average.
- This means rents will continue to increase at a slowing rate.
Zoopla’s Rental Market Index is a repeat transaction index, based on asking rents and adjusted to reflect achieved rents. The index is designed to accurately track the change in rental pricing for UK housing.
