According to property website Zoopla, rapid increases in rental costs have already peaked and the market is expected to cool in the near future, although tenants will still face higher rent prices in the coming year. Newly let properties saw a 9.7% increase in costs on average this October, up from the previous year and averaging £1,201 per month. The data shows that rental prices have increased by 31% over the past three years, a trend driven by high demand as supply from private landlords decreases for various reasons.
Richard Donnell, executive director at Zoopla, suggests that a combination of various factors, such as the strength of the jobs market, rebounding from Covid, immigration and first-time mortgage rates being high, has led to tenants increasing demand in the rental market. This demand has led to some bidding wars between tenants and downsizing among others; data indicates that many UK families are now more likely to rent smaller homes, suggesting that market trends continue to change.
Donnell predicts that by the end of next year, annual rental growth will slow down to 5%, the slowest rate since September 2021. He adds that while the imbalance in supply and demand is not going to disappear in the rental sector, the market is expected to become more balanced than it has been over the past three years, including a potential slowdown in London where rent prices are currently exceptionally high. However, there are still discrepancies across the UK with rental growth continuing in Scotland, which is bucking the trend, particularly in Edinburgh and Glasgow.
Advice given by agents to prospective tenants on how to secure rental agreements includes starting the search for a property well in advance, keeping an ear out with agents before properties are listed publicly, building relationships locally, and making sure rental budgets are realistic and sustainable in the long term
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