"While new tenants are still paying more than they were at this time last year, the pace of growth continues to slow"
- Colleen Babcock - Rightmove
The average advertised rent of a home outside of London is now £1,341 per calendar month, dropping by 0.2% compared with last quarter and bringing an end to consecutive months of new record rents.
According to Rightmove, while this equates to a drop of just £3 in newly advertised rents, it’s a key milestone for the market as the pace of rent growth slows, having accelerated by 12% year-on-year at the peak in 2022.
Rents are still 4.7% higher than this time last year, but this is the slowest rate of growth since 2021.
Meanwhile, in the capital, average advertised rents in London do reach another new record of £2,695 per calendar month (PCM). However, the increase is only 0.1% this quarter (+£1) and average rents are now 2.4% higher than this time last year, the lowest this figure has been since 2021.
Compared with recent supply-constrained years, one of the drivers of slowing rent growth has been the gradual improvement in the available supply of rental properties across Great Britain. The number of available rental properties is now 13% higher than at the same time last year.
The other side of the equation is that fewer prospective tenants are looking to move than at this time last year, with the number of enquirers down by 16%.
There is a combination of factors that contribute to changing supply and demand dynamics. Some demand may have transitioned to the sales market, particularly first-time buyers, helped by lowering mortgage rates and higher average wages.
Agents report that some tenants are choosing to stay put rather than move due to costs, and while there is evidence of some landlords choosing to exit the market, there are also signs that other, perhaps larger landlords are continuing to invest.
The average number of applications per rental property is still in double digits at 10, double the pre-pandemic average, so the market is still very busy historically.
Prospective tenants will be feeling the effects of improved supply differently depending on their location. The number of available properties to rent has improved the most in the North East (+30%), and least in Wales (+3%), highlighting regional differences in supply improvements.
The proposed Renters’ Rights Bill coming into effect potentially later this year marks a significant change for landlords and tenants.
While this is set to be a significant legislative shift, there are currently no major signs of an immediate impact on the rental market. The number of new properties coming into the rental market is stable compared with last year, suggesting neither a sudden influx of newly advertised properties, nor a mass exodus of landlords. Average rents have also come downwards.
However, the Renters’ Rights Bill is just the latest change for landlords to navigate, having also had to manage wider legislative changes and affordability challenges brought on by high mortgage rates, driving some landlords to choose to sell up.
On average, 15% of homes for sale on Rightmove were previously for rent in 2024, compared with 13% in 2023. London was the most affected, with nearly one in four (24%) homes for sale having previously been for rent, compared with one in five (20%) in 2023.
“A first quarterly drop in rents is the culmination of several months of improvement in the balance between supply and demand," explains Rightmove’s property expert Colleen Babcock. "While new tenants are still paying more than they were at this time last year, the pace of growth continues to slow."
However, she adds, "Though this is the big picture of market activity, agents on the ground still tell us that the market is very hot, and some areas have improved more than others when it comes to the supply and demand balance. Our own data shows that the average rental property is still receiving 10 applications per property, which is lower than the peak, but still double the pre-pandemic norm."
