Rental Growth Slows, but Still on an Upward Trajectory

Rents are still climbing, but rental growth is starting to slow down.

The latest data shows that while rents continue to climb, rental growth is starting to slow down. According to Nicky Stevenson, Managing Director of Fine & Country, with renter affordability increasingly stretched, many renters are having to be more flexible when it comes to aspects such as location, with many extending their search to beyond their city.

“Despite rental prices climbing for the last 13 consecutive quarters, according to Rightmove the pace of asking rent growth is slowing and has softened for three quarters in a row,” says Stevenson. “Average prime market rents continue to grow in all regions of England and Wales, with the average prime market rent at £3,798, up 15% year-on-year. Although supply remains an issue, there are signs of improvement, with the number of available properties to rent 6% higher than last year, although 46% below 2019 levels. The lack of stock is being felt countrywide, with TwentyCi reporting that all regions aside from Inner London have less than 1.5 months of available stock. Although interest rates below 4% are now available for Buy-to-Let landlords, increased regulations remain concerning for landlords.”

Stevenson notes that renter affordability is becoming increasingly strained, as growth in private rental prices continues and inflation remains stubbornly high. “According to Dataloft DRMA, renters pay an average of 26.8% of their gross income on rent, up from 25.7% three years ago. The pandemic has changed the way people live, and with 44% of people continuing to work from home, renters are able to be more flexible on location to find more affordable properties. Analysis of ten major UK cities revealed that 42% of renters contacted their agents to move out of their city, up from 37% the same time last year. London has seen the biggest increase in the proportion of renters looking to leave, followed by Sheffield and Manchester,” she concludes.