What’s been affecting my rental property?

What’s been affecting my rental property?

Read on for the latest review and how to get an up-to-date rental valuation.

As a landlord, you need to know if the market has a sound footing. For future investing and current rentals, it’s vital to get relevant insight.

Opportunity still exists for buy-to-let investors

  • Buy-to-let still represents a potentially strong investment vehicle. With continued high demand and investment in the right locations, buy-to-let can generate a good return.
  • Those that continue to invest may focus on buying lower value homes with higher rental yields to deliver profitable income.
  • With a mismatch still between high demand and low supply, agents are able to let properties quickly to the right tenant.
UK annual rental growth still rising

UK annual rental growth still rising

Rental growth is still running ahead of earnings growth, but there are signs that it is starting to cool. Find out if you could be earning more from your property.

The UK is past peak rental growth, which is expected to halve over 2024 to 5%, the lowest growth since 2021. London will lead the slowdown with rents expected to increase by just 2% throughout this year.

Looking around the UK, excluding London, regional rents are still set to out-perform as affordability is less of an issue than it is in the capital. Scotland has the highest rental growth in the UK, with the rental controls that were introduced in 2022 playing a major factor in this. At the start of a new tenancy, rents are being reset to a high market rate, to cover against costs and future-proof against capped rises during a tenancy.

9.7%

Rental value increase in the UK

10.7%

Rental value increase in Wales

12.9%

Rental value increase in Scotland

9.0%

Rental value increase in London

Want to know more about the value of your property?

Want to know more about the value of your property?

Demand is starting to soften as the market imbalance changes

There are signs that the recent years’ market impacts since the pandemic are starting to ease. Demand for rented property is 32% above the 5-year average, but has seen an 11% decrease year-on-year. With affordability becoming an increasing issue, especially in London, the volume of those asking for rent reductions has increased, with 10% of November 2023 rental listings being affected. The supply/demand mismatch is still across all areas of the UK, but will slowly start to rebalance.

32%

Increase in demand vs 5-year average

11%

Year-on-year decrease in demand for rental properties

17

Enquiries per rental home, November 2023

5%

Expected annual rental inflation by December 2024

What are some of the key factors impacting the rental market?

What are some of the key factors impacting the rental market?

There are signs that asking rents have overshot affordability in some markets, further evidence of the growing resistance to higher rents. The factors that pushed up rental demand in recent years, such as the economy re-opening post pandemic, increased mortgage rates and jobs growth, are starting to plateau. However, rents in regional markets outside of London may still out-perform where affordability is less of a constraint on rental growth.

£3,360

UK average per annum rent increase on new lets over last 3 years

5%

Current level of asking rent reductions

28.4%

UK average amount of income spent on rent (40% in London)

How has this affected my rental property?

If you are a landlord looking to improve your rental yield, or you would like to find out more about your property’s rental value, we're here to help:

Statistics from the Zoopla Rental Market Report, December 2023.
MKT/UKON/181223