UK rental growth slows to +5.7%, its lowest level for 33 months with average rents falling in some UK cities over H1 2024

• The UK is well past peak rental growth - rents for new lets are 5.7% higher in the 12 months to June 2024, the lowest for almost 3 years (Oct-21)

• Rents have risen by just 1.2% over the first half of 2024. 

• Zoopla’s index finds that there have been localised falls in rents across several cities including Nottingham, London, Brighton and Glasgow as demand softens and supply increases

• Rental growth on par with earnings for the first time in almost three years

• UK average rent now stands at £1,232 per month

• Zoopla is not forecasting annual rent falls, with rental growth on track to be 3-4% higher by the end of 2024, half the rate of rent inflation over 2023 (+8%)

For immediate release, 21st August 2024, London: The latest rental market analysis from leading property website Zoopla has revealed that rental growth has slowed to its lowest level for 33 months. Demand for rental homes has fallen by 39% over the past year with the rental market shifting from ‘red hot’ to ‘hot’. 

Rents for new lets have risen by 5.7% over the last 12 months to June 2024. The average UK rent is £1,232 per month, or an increase of £66 per month compared to this time last year.

What is happening to rents in major cities?

Rents have fallen across several major UK cities over the first half of 2024 including Nottingham (-0.6%), London (-0.4%), Brighton (-0.2%) and Glasgow (-0.2%). Zoopla’s rental index tracks rental growth in 64 cities across the UK, and in 75% of these, the rate of rental growth is lower. 

While rents have over-shot and are adjusting in some areas, they continue to rise at an above-average rate in more affordable markets adjacent to large cities and where renting remains better value for money. For example, Rochdale (+6.9%), Doncaster (+5%), Southend (+5%), Sunderland (+4.4%) and Telford (4.3%) have all recorded rental growth of over 4% in the first half of the year. 

There is a similar pattern of rental growth across London boroughs with rents falling in inner areas led by Tower Hamlets, Newham and Greenwich. Over one-third of London boroughs (12 of 33) have recorded rents falling in H1 2024 and well below the levels recorded a year ago. Rent levels are lower in outer London and this explains above average rates of rental growth in the first half of the year.

Supply rising slowly but still remains a major challenge for renters

The supply of homes available for rent per estate agent is rising slowly. While agents have 17% more homes for rent than a year ago, the average letting agent still has a third fewer homes to rent compared to the pre-pandemic average (2017-2019).  

The modest improvement in supply is being driven by two factors. Lower mortgage rates have made it a little easier for first-time buyers to buy homes and leave renting, while more new homes are being sold to corporate landlords for renting. A small but not insignificant number of private landlords are continuing to sell rented homes in the face of a changing business environment and higher mortgage rates. This is acting as a drag on the total number of properties available to rent. 

Commenting on the data, Richard Donnell, Executive Director at Zoopla said: “Renters will welcome the fact that rents for new lets are rising at their slowest pace for 3 years. Rents have risen so fast they have over-shot in some cities and we are seeing modest falls in rents in some cities as rents adjust to weaker demand and modest increases in the availability of homes for rent. 

“Rents continue to rise more quickly in more affordable areas adjacent to large cities as renters seek better value for money. 

Rents are on track to be 3-4% higher over 2024 which is more than half the level recorded last year and below earnings growth providing some modest relief for the UK’s private renters.”