Home Money Rent increases fall to their lowest level in almost three years, with some cities even seeing declines

Rent increases fall to their lowest level in almost three years, with some cities even seeing declines

0 comments
Relief: Rent increases have been lower in the first six months of 2024
  • Rents have fallen in cities such as Brighton, Glasgow and London.

The booming rental market appears to be cooling off after three years of rising prices, according to Zoopla.

The property website has revealed that rental growth has slowed to its lowest level in 33 months.

While average rents for newly leased properties are 5.7 percent higher than a year ago, rents have risen just 1.2 percent in the first six months of 2024.

Relief: Rent increases have been lower in the first six months of 2024

The average house rent now costs £1,232 a month, meaning prices have risen by £66 a month compared to this time last year.

In fact, rents in some major cities have fallen during the first half of this year, including Nottingham, London, Brighton and Glasgow.

In London, rents are falling in inner-city areas, led by Tower Hamlets, Newham and Greenwich.

More than a third of London boroughs (12 out of 33) saw rents fall in the first half of 2024, well below levels seen a year ago.

However, in outer London areas, where rents are cheaper, above-average rental growth rates have been recorded in the first half of the year.

Rents continue to rise at an above-average rate in more affordable markets adjacent to major cities and where rent remains a better value.

Renters in Rochdale have seen rents rise by 6.9 per cent during the first half of the year, while average rents have also increased by 5 per cent in Doncaster and Southend.

1724325902 780 Rent increases fall to their lowest level in almost three

What is causing the rental market to cool down?

The increase in rents recorded in recent years has occurred because there are not enough homes available to meet demand.

The supply of properties available to rent per estate agent is slowly increasing, according to Zoopla, which could be taking some pressure off the market.

However, while agents have 17 per cent more properties to let than a year ago, the average estate agent still has a third fewer properties to let compared to the pre-pandemic average recorded by Zoopla between 2017 and 2019.

The modest improvement in supply is being driven by two factors, according to Zoopla.

Lower mortgage rates have made it a little easier for first-time homebuyers to buy and move out of renting, while more new homes are being sold to corporate landlords for rent.

A small but not insignificant number of private landlords are still selling rented properties despite rising mortgage rates and tighter restrictions, which is holding back the overall number of properties available for rent.

Richard Donnell, chief executive of Zoopla, said: ‘Tenants will welcome the fact that rents for new leases are rising at their slowest pace in three years.

‘Rents have risen so quickly that they have breached limits in some cities and we are seeing modest declines in rents in some cities as rents adjust to weaker demand and modest increases in the availability of rental housing.

‘Rents continue to rise most rapidly in more affordable areas adjacent to major cities as tenants seek better value for money.

‘Rents are on track to be 3-4 per cent higher through 2024, which is more than half the level recorded last year and below earnings growth, providing modest relief for UK private renters.’

However, Tom Bill, head of UK residential research at property firm Knight Frank, warns that if the government is seen to penalise landlords with tax changes and legislation, more properties could be sold, leading to further supply-side pressures.

“Rental value growth remains high by historical standards after several landlords sold their properties in recent years due to the proliferation of red tape and taxes,” Bill said.

‘Just when there are signs that supply is recovering and upward pressure on rents is easing, there is renewed uncertainty surrounding further legislative changes by the new government.

“If any new rules prove too punitive for landlords, they could push up rents as more landlords sell.”

How to find a new mortgage

Borrowers who need a mortgage because their current fixed-rate contract is ending or are purchasing a home should explore their options as soon as possible.

What if I need to refinance my mortgage?

Borrowers should compare rates, talk to a mortgage broker and be prepared to act.

Landlords can close a new deal six to nine months in advance, often with no obligation to accept it.

Most mortgage agreements allow fees to be added to the loan and only charged at the time of contracting. This means borrowers can lock in a rate without paying costly origination fees.

Please note that by doing this and not paying off the fee at the end, interest will be paid on the fee amount for the entire term of the loan, so this may not be the best option for everyone.

What if I’m buying a house?

Those with home purchases lined up should also try to get rates as soon as possible, so they know exactly what their monthly payments will be.

Buyers should avoid over-stretching themselves and be aware that home prices can fall as higher mortgage rates limit people’s borrowing capacity and purchasing power.

How to compare mortgage costs

The best way to compare mortgage costs and find the right deal for you is to speak to a broker.

This is Money has a long-standing partnership with free broker L&C, to provide you with expert, free mortgage advice.

Are you interested in seeing today’s best mortgage rates? Use This is the best mortgage rate calculator from Money and L&C to display offers that match your home value, mortgage size, term, and fixed rate needs.

If you’re ready to find your next mortgage, why not use L&C’s Online Mortgage Finder? This will search through thousands of offers from over 90 different lenders to discover the best option for you.

> Find your best mortgage offer with This is Money and L&C

Please note that rates can change quickly, so if you need a mortgage or want to compare rates, speak to L&C as soon as possible so they can help you find the right mortgage for you.

The mortgage service is provided by London & Country Mortgages (L&C), which is authorised and regulated by the Financial Conduct Authority (registration number: 143002). The FCA does not regulate most buy-to-let mortgages. Your home or property may be repossessed if you fail to keep up your mortgage payments.

You may also like