There are indications that more landlords are having to lower their asking rents, especially for larger properties, to match what tenants can afford
Advertised rents have reached a new peak, but the rate of increase appears to be slowing down, according to property website Rightmove.
There are also indications that more landlords are having to lower their asking rents, especially for larger properties, to match what tenants can afford. Across Britain, excluding London, the average monthly rent asked for a property coming onto the market in the first quarter of 2024 was £1,291, says Rightmove
This was an 8.5% increase from the previous year, which was less than the annual rise of 9.2% recorded in the fourth quarter of 2023. The average advertised rent in London also reached a new high in the first quarter of 2024, but at £2,633 per month, it was just £2 higher than the average asking rent in the fourth quarter of 2023.
London asking rents were 5.3% higher in the first quarter of 2024 than a year earlier, a slowdown from a 6.1% annual rise in the fourth quarter of 2023. Although the balance of supply and demand is gradually improving from its peak, Rightmove estimates that nearly 50,000 rental properties would still be needed to return to the pre-pandemic level of rental supply.
The number of available rental properties is 11% higher than last year, but 26% below 2019 levels, the website said. It added that, while the number of tenants looking for a home to rent is lower than a year ago, it is still higher than in 2019.
Letting agents are currently dealing with an average of 13 inquiries per rental property. Although this is a decrease from the 19 inquiries seen at the same time last year, it’s still almost three times the average of five inquiries per property in March 2019.
Rightmove has also highlighted that tenant affordability is under pressure, with the number of rental price reductions hitting a five-year peak for this period. Currently, 22% of rental properties have seen a price drop, which is up from 16% the previous year and marks the highest rate for this time of year since 2019 when it was 23%.
The asking rents for larger homes, such as four-bedroom detached houses and properties with five or more bedrooms, are most likely to see price cuts. An unprecedented one-third (30%) of these top-tier properties are experiencing price reductions, the highest figure for this time of year in Rightmove’s records dating back to 2012.
Tim Bannister, Rightmove’s director of property science, commented: “The rental market is no longer at peak boiling point but it remains at a very hot simmer. Looking at data across the whole market, we can see some slow improvements for tenants with more choice, and competition with other tenants slowly starting to ease.
“However, tenants may not feel the benefit of some of these improvements in their local market, as the balance between supply and demand remains so far from pre-pandemic levels. The fact that, even with some improvements to the level of supply, we are still nearly 50,000 properties behind the pre-pandemic market, is a stark reminder that the industry needs more good quality rental homes.”
Simon Thompson, group lettings director at Miles & Barr in Kent, said: “I think it is fair to say that price growth has eased; however the pace of new supply coming on to the market is also starting to slow, probably due to a combination of the relatively low numbers of new landlords coming into the market, and a few landlords looking to sell.”
“There has been an increased number of price reductions, but this is mainly happening at the top end of the market, with smaller homes still in high demand. It appears stock will get tighter as we move into the summer months and as such the number of reductions will likely decrease.”
Halifax reported on Monday that, in the home buyer market, prices for smaller homes such as flats have been increasing at a faster rate than bigger properties. The bank said the first-time buyer market has been “resilient”, and as interest rates have stabilised and buyers adjust to the new economic reality of owning a home, one way for buyers to compensate for higher borrowing costs is to target smaller properties.