As of last year, nearly a fifth of UK homes were privately rented, with just over two-thirds (67%) of landlords reporting a rise in tenant demand during the second quarter of 2023, according to comparison website Uswitch, which also reported that the average price of UK rent is set to rise by nearly a fifth (17.6%) between 2023 and 2028. And in January 2024, the average rent for new lets across the UK was £1,223 per calendar month.
The 2023 Property Academy Renter Survey has taken a detailed look at the increasing UK trend of renting. It found that more than a third of renters decided to live in their homes that way mainly because they lacked the deposit needed to buy a place. For other tenants, the flexibility of renting is a driving force behind the decision to rent rather than purchase a property. Meanwhile, for older people in particular, not having to worry about maintenance or upkeep is a further key consideration.
The website Business Matters recently published figures from the Office for National Statistics (ONS) showing that the UK’s rental market had seen a previously unheard of surge in prices over the last year, with rents rising by approaching a tenth (9.2%).
This also marks the biggest yearly percentage change documented since 2015. London, probably unsurprisingly, saw the biggest leap in rents, which rose by 11.2% across the capital during the past year, with Kensington and Chelsea remaining the most expensive location in which to rent a place in the UK.
There has also been a clear imbalance between supply and demand, thanks to higher house prices and mortgage rates. At the same time, the higher cost of borrowing plus regulatory constraints have meant that some landlords are reluctant to expand their portfolios. This has not helped to boost the supply of rental homes coming on to the market.
Peak renting?
There are some indications that the current boom in renting may not continue that much longer. Some industry insiders now feel that tenants could reach their affordability limits before too long, so that we could soon be seeing the end of these continued dramatic hikes in rents.
The CEO of one well-known estate agency has suggested that many are approaching affordability ceilings, and this could suggest a shift in the dynamics of the market so that rents will have to become more in line with average salaries in the future.
One well-known online property portal has said that it felt that new rents would increase at a more gentle pace throughout 2024, although it added that only a significant boost to supply could really help with rental affordability.
The portal predicts yearly UK rental growth to halve to 5% by December, with growth in London of 2% – the lowest level since three years ago.
Another estate agency based in London forecasts a 5% rise in rents UK-wide this year, then a drop to 3 or 3.5% by 2025 due to new supply as it believe more landlords will return to the market.
Of course, no one has a crystal ball. But all this could mean that if you’re a landlord considering a rent increase, now could well be a good time to do it. (Any rise will, of course, need to be in keeping with the agreement you have in place with your tenants.)
Equally, if you’re considering investing to become a buy-to-let landlord, it could be that if you leave it much longer, you could risk having to charge your tenants a lower rent.
Oakfield Estate Agents
At Oakfield Estate Agents, we’ve been helping landlords to let out properties in East Sussex since the 1990s. From relatively modest beginnings, we’ve grown to encompass three offices in Eastbourne, Hastings and Bexhill-on-Sea.
Like everyone else, we can’t predict the future, but we certainly believe that now, during a period of rental boom, is a great time to let out a property.
We provide our landlord clients with a superlative service based on a detailed understanding of both the local and national property sector plus our part of the world, which we love. Equally, we forge strong working relationships with everyone we deal with, and we’ll take the time to get to know you and what your needs are before we do anything else.
We could help you with everything from valuations to marketing to finding the right tenants for your property and more. We’ll also run a thorough process for vetting and referencing prospective renters. Get in touch today to learn more about how we could make the process of letting out a property hassle-free and as profitable as possible. Find our branch contact details here.