Rents across the UK are rising at a faster rate again, with forecasts indicating that tenants may contend with even steeper costs by the end of 2024, fueled by dwindling supply and fierce competition for rentals.
Data published by property platform Zoopla shows that, as of July, the average rent for new agreements has grown by 2.6% compared to the previous year. This jump, although less steep than the broader inflation rate, could accelerate further—Zoopla expects annual rent increases for private tenants to reach as much as 4% to 5% before 2024 ends.
Fewer Properties Intensify Demand
The rental market’s quickening pace is largely attributed to continued shortages in available properties. In July, rental listings stood 3% below the same period last year, extending a pattern of declines noticed earlier in 2024. Each rental property now receives upwards of five enquiries on average, making it the most competitive climate in almost two years—though it is not as intense as the high-demand period immediately post-pandemic.
This crunch is pronounced in London and other expensive locales, where supply can’t keep pace with eager tenants. According to Zoopla, many would-be first-time buyers have postponed purchasing homes due to higher mortgage rates, choosing instead to remain tenants and further straining the rental market.
Richard Donnell, who serves as executive director at Zoopla, highlighted the market’s high sensitivity to changes in supply. He stated, “Growing the number of homes for rent through increased investment is the most sustainable route to boosting choice for renters and ensuring stability in rent levels over the long run.”
Regulatory Shifts and Regional Differences
With The Renters’ Rights Act having taken effect in England in early May, the private rented sector is experiencing what is described as the biggest shake-up in more than 30 years. Despite these reforms, Zoopla notes that investment from landlords into new rental housing “remains muted as a result of higher costs and more regulation.”
Rental price growth had slowed to just 1.6% year-on-year by February 2024 but picked up again as the rental housing shortage deepened through the spring and summer months.
The report highlights regional disparities in rent increases. Less expensive parts of the UK generally see households able to handle further rent hikes, while expensive cities—most notably London—are already close to affordability limits, restricting further possible rises. Bristol now ranks as England’s least affordable city for renters, raising questions for policymakers and local leaders about the best way forward.
Zoopla predicts the pace of rent rises could largely track growth in workers’ average pay, but warns that a continued imbalance between tenant demand and available rental properties might become an even bigger headline issue by the end of 2024.
Industry Urges Action to Increase Rentals
Propertymark’s chief executive Nathan Emerson emphasized that Zoopla’s data highlights the “need for more high-quality rental homes.” He asserted, “A sustainable private rented sector requires the right conditions for responsible landlords to invest for the long term. Increasing supply must remain a priority if we are to give tenants greater choice, improve affordability and create a more stable rental market.”
With autumn approaching, both tenants and industry experts are expected to monitor the evolving market and regulatory effects closely, in hopes of restoring some stability to a property sector continuously affected by shifts in economic and political circumstances.