According to figures from Rightmove, average advertised rents outside of London are up 1.5% this quarter, an increase of £20, and this is the third consecutive quarterly record this year. It is also 3.1% up on the same period last year.
Average advertised rents in London are up 0.9% this quarter, equal to £24, but this is only up 1.6% on last year.
The report found that rental stock is also 9% up on last year, with Rightmove noting that the rising availability of properties has contributed to “yearly rent rises both nationally and in the capital steadying to more normal levels”.
However, Rightmove noted that the number of available rental properties is 23% below 2019, but this is the closest the market has been to pre-pandemic levels of available supply for four years.
The report added that the pace at which new rental properties were coming to market has slowed and is only 1% ahead of this time last year.
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Tenant demand has also muted somewhat and is 14% lower than the same time last year.
Rightmove noted that a rise in stamp duty for rental home purchases from October last year and rumours about National Insurance for landlords in the Budget, and the Renters’ Rights Bill could be dampening landlord appetite.
Rightmove said affordability remains “very stretched” for tenants, as well as landlords looking to grow their portfolios.
It pointed to average earnings increasing by 5% compared with last year, outpacing rent rises, the cost of renting still takes up 44% of the average wage, up from 40% five years ago.
Renters looking to save up a 20% deposit for their first home, whilst contending with record rents, will have to save £45,374, a rise from £40,326 five years ago.
For landlords looking to expand their portfolio, the latest average interest rate on new buy-to-let (BTL) mortgages stands at 4.87%, according to UK Finance. This is a drop from last year’s 5.21% and is significantly higher than the 2.93% seen before the mini Budget in 2022.
Landlords are ‘hesitant’
Colleen Babcock, Rightmove’s property expert, said: “The majority of landlords are looking to stay in [the] market and even grow their portfolios, which is positive for tenants, but there are clearly challenges for those looking to invest in rental property. Sustained high mortgage costs mean landlords need to make sure purchases are viable, and uncertainty around legislation like the Renters’ Rights Bill and what may or may not be in the upcoming Autumn Budget isn’t helpful when looking to make financial investments.
“Landlords who were considering selling up over the next year told us that legislation changes were their biggest source of frustration. The government needs to consider this when setting its policy agenda over the next 12 months, otherwise we may see more landlords choose to leave the sector, which will be to the detriment of tenants.”
Daniel Fisher, head of lettings at John D Wood & Co, added: “Tenant demand has eased as wider economic and political uncertainty makes people more cautious about moving, with many businesses scaling back relocations and some renters leaving London altogether. This has led to more re-let properties coming to market, even as the overall number of landlords declines.
“At the same time, many landlords are hesitant to invest amid limited capital growth, shifting tax rules, and ongoing uncertainty around the Renters’ Rights Bill and the Budget. The result is a slower, more cautious market that’s likely to remain uneven over the next year or so – though this also presents opportunities for well-capitalised landlords to expand as others exit, and for tenants to benefit from a wider choice of homes.”
