UK Rental Prices See First Decline in Over Five Years, But London Sees Continued Rise

Rents across the UK have experienced a slight dip for the first time in over five years, according to new data from Rightmove. While rental prices outside of London have decreased marginally by 0.2%, tenants in the capital are still facing record-high rates.

The national average rent outside London fell to £1,341 per month, a drop of just £3, marking the first decline since late 2019. Though the change is minimal, Rightmove describes it as a “key milestone” reflecting an improving balance between rental supply and demand. Despite the decrease, rents outside London remain 4.7% higher than a year ago, although this is significantly below the peak inflation rate of 12% experienced in 2022.

Colleen Babcock, Rightmove’s head of trade marketing, attributes the easing of rents to a 13% increase in the number of rental properties available compared to last year, while the number of prospective tenants has decreased by 16%. The northeast of England has seen the most notable growth in rental supply, and Babcock believes that some renters may have transitioned to homeownership, aided by stabilising mortgage rates and slower house price growth.

Despite the slight drop, demand for rental properties remains high, with each property attracting around ten applicants on average. Since the first lockdown in March 2020, rents outside London have surged by 64%, while London rents have risen by 28%.

In contrast to the national trend, rents in London continue to climb. The average rent in the capital has hit a record high of £2,695 per month, marking new highs each quarter since late 2021. However, London’s annual rent increase of 2.4% is the lowest seen in nearly four years, suggesting a cooling off in the once-heated market.

Alex Bloxham, head of residential lettings at Bidwells, noted that the market is showing signs of cooling, stating that further improvements in supply could lead to downward pressure on rents in the future.

Meanwhile, the UK government’s proposed Renters’ Rights Bill, aimed at enhancing tenant security and rights, may be introduced later this year. Although some landlords have expressed concerns about the reforms, Rightmove has not observed any immediate effects on the market as of yet.