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Rental growth forecast for 2024

The rental market remains under pressure and a strong resurgence in rental growth is expected as we move into 2024.

As we approach the festive season, the rental market is experiencing a slight slowdown in growth, in line with typical seasonal patterns. “However,” says Nicky Stevenson, Managing Director of Fine & Country, “the market remains under pressure and a strong resurgence in rental growth is expected as we move into 2024, with positive indicators and trends supporting this forecast.”

According to the latest data from HomeLet, rents continue to rise with year-on-year growth currently at 8.9%. However, there has been a marginal monthly decrease of -0.3% in November, bringing the average rent across the UK to £1,279. After a busy summer season, a small fall in rents in November follows traditional seasonal patterns, although this could potentially indicate the beginning of a slowdown.

“In the prime market, where demand remains high, the average rent has increased by 5.8% year on year, reaching £3,854 per month. Notably, annual rental growth is positive across all regions, with the South West leading the way with a significant rise of 16.8%,” Stevenson comments.

Speaking about what is expected as we move into the new year, she adds “Looking ahead, industry forecasts suggest a continued rise in rents throughout 2024, supported by the ongoing supply-demand dynamics. However, experts anticipate that the market may reach an ‘affordability ceiling’ in 2025, prompting a more balanced phase.”

With regard to trends in the market and renter preferences, the Property Academy Renter Survey provides additional insights, revealing that more than a quarter of renters are choosing to rent as a lifestyle choice rather than out of necessity. Referring to the data, Stevenson says, “Approximately 37% of respondents plan to continue renting for two years or more, citing benefits such as flexibility, a higher standard of living, and access to amenities, as well as the ability to work remotely.”

She notes that as winter sets in, tenant preferences are becoming increasingly clear. “The survey shows that 55% of renters would prefer utility bills to be included in their rent. Additionally, 44% of respondents stated they would be more inclined to rent a property if utility bills were included, according to Zero Deposit. However, Zoopla reports that only 12% of properties currently include bills within the asking rent, highlighting a potential area for consideration by landlords and letting agents,” Stevenson concludes.