Rental Landscape 2023 by Heather Hilder on October 24, 2023 Rental Landscape 2023 Navigating the Rental Landscape for the rest of 2023: Trends and Projections Higher mortgage rates and the cost of living have temporarily deterred some First Time Buyers from entering the property market. However, the number of tenants chasing rental properties continues to grow. Annual UK rental growth is currently 10.5%, according to Zoopla’s most recent Rental Market Report, published in September. This is down from 12.1% a year ago but has been rising in double digits for 18 months. But what’s in store for the rest of the year? Rents Rises Mortgages – including Buy-To-Let mortgages – are gradually coming down now but they increased significantly after the Truss/Kwarteng mini budget last year. And landlords inevitably looked to cover rising costs. Across the UK, rents are expected to rise by around 4% in 2023 and 2024, according to Statista. Increases are fuelled by rising demand and higher maintenance costs caused by inflation. Research from Zoopla shows that average rents have gone up by £110 a month over the last 12 months – an annual increase of £1,320. Rents for new lets have risen even more, rising by an average of £2,772 a year over the last three years. Across the UK, on average, renters are paying 28.4% of their gross earnings on rent. This is the highest rate in 10 years. In Scotland, the country is registering annual rental inflation of 12.7% – the highest in the UK – with rents for new lets 15.6% higher in Edinburgh and Dundee and up 13.7% in Glasgow. Many commentators say this is due, at least in part, to new rent controls introduced in September 2022. Shortage of rental stock The mismatch of supply and demand for rental properties will continue to impact prices. According to Zoopla’s Rental Market Report, in December 2022 the supply of rental properties was 38% below the five-year average even though rental enquiries themselves were at a 46% high above the five-year average. In its September report, demand is now 51% above the five-year average against a stock of properties to rent that is down by 30% on the five-year average but up by 20% on 2022. A fall in home building levels, as well as reduced investment by private landlords thanks to higher borrowing costs, will continue to influence the supply/demand challenge for the rest of this year and into next. Looking ahead The remaining months of 2023 are likely to see little change in these patterns. Zoopla predicts rental growth to end the year at more than 9%. In theory, the impact of affordability should reduce rental growth – but with a market that’s also pricing people out of the buying market this may be at a slower rate. UK rental growth of 5-6% is currently expected in 2024, with a more rapid slowing of retail inflation in inner London likely to be one of the biggest influencers on the overall UK growth rate. Callaways Letting Team ensures a seamless and stress-free letting experience for you. We serve various locations along the South Coast, including Falmer, Worthing, and Brighton & Hove. Also, our professional team possesses extensive knowledge of the local rental market. This will assist you in determining the ideal rental price and attracting the most suitable tenants. For further information on our comprehensive letting services, please don’t hesitate to contact us today. You can also receive a complimentary, instant online rental valuation for your property by clicking here.
