“`html
London, UK – august 11, 2024 – British rental growth has substantially slowed, marking the first decline in new rental listings as 2020, according to the latest Hamptons lettings index. The slowdown offers a potential respite for renters facing a prolonged period of escalating costs, though existing tenants are still seeing increases upon lease renewal.
The report,released today,indicates that the average rent for new tenancies in Britain fell in July,signaling a shift in the market dynamics. This contrasts sharply wiht the rapid rent increases experienced over the past year. In July 2023, the North East saw rents climb by 10.6 percent, while Yorkshire and the Humber experienced 6.7 percent growth, and the North West registered an 8.6 percent increase.
Currently, the average rent on a renewal stands at £1,290 per month, £83 lower than the average rent for new tenants.This represents the smallest gap in four years, suggesting landlords are moderating renewal increases to align with prevailing market conditions and broader inflationary pressures. The data is based on rents *achieved* through the Connells Group, rather than advertised rates, providing a more accurate reflection of actual market transactions.
Aneisha Beveridge, head of Research at Hamptons, attributes the slowdown to falling mortgage rates and a cooling broader economy. “After five years of relentless rent rises, the market has paused for breath,” Beveridge stated. “However, the underlying cost pressures haven’t disappeared.”
Context: the UK Rental Market & long-term Trends
The UK rental market has been under considerable strain in recent years, driven by a combination of factors including a shortage of available properties, increased demand from a growing population, and rising mortgage rates impacting landlords’ costs. The trend towards professionalization of the rental sector, with larger companies and institutional investors acquiring portfolios, is also influencing market dynamics. According to figures from the Office for National Statistics (ONS), the private rental sector housed approximately 4.4 million households in england in 2023, representing around 18% of all households.
The recent stabilization is partially attributed to increased housing supply in some regions, particularly following the completion of new build-to-rent schemes in cities like Manchester and Birmingham. However, the long-term outlook remains uncertain, with potential impacts from upcoming regulatory changes, such as the Renters (Reform) Bill currently progressing through Parliament, which aims to strengthen tenants’ rights and abolish Section 21 ‘no-fault’ evictions. The bill, championed by Levelling up Secretary Michael Gove, is expected to significantly alter the landlord-tenant relationship.
Moreover, the Bank of England’s monetary policy, including base rate decisions, continues to play a crucial role in influencing mortgage rates and, consequently, landlord costs and rental pricing. The current base rate, set at 5.25% as of August 8, 2024, remains a key factor in the market’s trajectory.
By Vicky Shaw, PA Personal Finance Correspondent
