- While rents increased last year, some cities began to see declines in early 2024.
- Overall, rents rose 6.6% year-on-year through April, the lowest level in two and a half years.
- But rents continue to outpace median income growth
Rents fell in several cities in the first three months of this year, according to new data, which will be good news for renters after years of constant increases.
According to Zoopla, average rents have fallen in Nottingham (1.4 per cent), followed by Brighton at 1.1 per cent and York and Glasgow both at 0.4 per cent.
They have also fallen by 0.3 per cent in Cambridge and London, as we approach the peak rental season between May and September.
Rent increases: While rents have risen in all regions over the last year, they have started to fall in recent months in cities such as Brighton. Meanwhile, Newcastle has seen a 10% annual increase.
While the falls are modest, Zoopla said it provided “clear evidence that rental market dynamics are starting to change” in these areas.
Renters have had to deal with double-digit annual increases in recent years, during which time rents have risen faster than median incomes.
Between April 2022 and April 2023, the typical rent for a newly rented home increased by 10 percent, a figure that fell to 6.6 percent in April of this year.
This was the lowest rent inflation rate recorded by Zoopla in two and a half years.
The property website said this was due to a drop in demand for rented properties.
Over the past year, the typical estate agent branch has seen demand for rental homes fall by 25 per cent, although there are still 15 households behind each rental home, more than double the pre-pandemic average of six.
Slower growth: Rents rose 6.6% in the year to April 2024, compared to 10% a year earlier
Capital gains: London rents rose 3.7% last year, much less than most other regions
At the same time, the average number of homes for rent per real estate agent has increased by almost a fifth (18 per cent) compared to this time last year, although it is still lower than before the pandemic.
Despite some localized falls in recent months, rents have continued to rise in all regions of the UK on an annual basis.
The North East saw the biggest increase at 9.5 per cent, but still has some of the cheapest rents in the country with a monthly average of £704. In Newcastle alone, rents rose 10 per cent to £805.
Rents have increased in all regions of the UK over the past year, but typically by less than the previous year.
It was one of only two regions, along with the South West, where average rents have risen more in the last year than in 2022-23.
In Scotland, rents have risen by 9.3 per cent over the past year to an average of £797. This is in addition to the huge annual increase of 13.4 percent the previous year.
At the other end of the scale, Northern Ireland saw the smallest increase, 2.9 per cent, with the average now at £747.
Rents in London rose by 3.7 per cent, although they remain the highest in the country at an average of £2,122. The year before, median rents shot up 13.1 percent.
Richard Donnell, chief executive of Zoopla, said: “Rising rent costs have fallen to their lowest level for 30 months.
‘Rents continue to grow faster than average incomes, although the difference is much smaller than a year ago.
“Rental demand remains well ahead of available supply, maintaining upward pressure on rents, but there are some areas where rental growth has plateaued.”
Donnell added that the next government should encourage more housing to be built if it wants to reduce costs for renters.
“The number of privately rented homes has remained static since 2016, which has compounded the increase in rents over the past three years,” he said. “More supply is the quickest route to easing pressure on tenants and improving the overall quality of rented housing.”
How do rents compare to income?
Rents for new rentals have risen faster than median incomes for more than two and a half years, since October 2021, according to Zoopla.
The gap between rents and income growth is currently 6 per cent, and falling rents mean it is starting to narrow.
However, rents are supported by the fact that few new private rental homes are being built, meaning demand still outstrips supply.
The picture varies across the country, and much depends on how affordable rents are relative to local incomes.
However, there is wide variation in the proportion of average people’s income that is spent on rent.
Rents are currently rising most rapidly in the North East and Scotland, where rental costs make up the lowest proportion of gross income, meaning landlords have more scope to increase them.
By contrast, London has the highest rents and they account for a greater proportion of average incomes.
They have now returned to 2015 levels, after having fallen due to the pandemic.