Navigating the Changing Landscape of Rental Market

September 19, 2023

If you’re a homeowner in the UK or looking to rent out your property you’re likely aware of the ever-evolving rental market, with massive changes occurring in both supply and demand over recent years. As a help guide, this blog post will discuss how navigating this changing landscape of rental markets can benefit those who choose to take advantage of its opportunities. 

The current state of the UK rental market

The UK rental market has experienced a notable increase in rents for new lets. This has been largely driven by a combination of factors, including growing demand from tenants and a shortage of available properties. Landlords are also facing newly introduced regulations and property taxes, putting additional pressure on them to increase rental prices. The rising rents are not only affecting those looking for new accommodation but also adding strain to the already high cost of living. Despite this, the rental market remains a crucial part of the UK housing market, with millions of people depending on it for their homes.

Rental prices across the UK have been soaring for the past 18 months, leading to what some have dubbed as a “rental inflation.” According to recent statistics, the average cost for a renter has risen by a staggering £2,800 over the last three years, leaving many struggling to keep up with the demanding costs.

As we look towards the future, the forecast calls for an increase of 9% in 2023, followed by a slower pace of growth in 2024, with anticipated increases of 5-6%. This is part of a larger trend in the housing market, reflecting the ongoing demand for rental properties in many areas. While this news may not be welcome for renters, it’s important to stay informed about the state of the rental market as we plan for the future.

How can you prepare?

Cities like Edinburgh and Manchester are witnessing an annual growth of up to 15.6% and 14%. In contrast, inner London has seen a slowdown in rental growth due to expanding supply and affordability pressures. As renters continue to seek better value for money, outer London suburbs are becoming the new hub for rental growth. However, with the rental growth expected to end the year at over 9%, higher than the anticipated earnings growth of 6%, it’s essential for renters to plan their finances carefully. Moving forward, rents for new lettings are predicted to keep rising above earnings growth in 2024 due to ongoing supply constraints and sustained higher mortgage rates. 

For those considering a move to inner London, it’s worth noting that rental inflation is expected to slow down due to higher rents and affordability constraints. This could potentially reduce the overall UK rate of growth to more sustainable levels. 

The rental market in the West Midlands continues to show significant dynamism. Currently the average rent PCM is around £852 and for new tenancies there has been a 10% increase compared to last year’s rental prices (source: Zoopla). Furthermore, rental yields in the West Midlands are relatively high, ranking at 28.9% affordability for Single earners, making it an attractive area for property investors. 

Get in touch

Navigating the rental market can be a daunting task, especially for those who are new to it. At ZJB we are dedicated to providing our clients with the knowledge and support they need to make informed decisions when it comes to renting a property. Don’t hesitate to reach out to us for more information and support.