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Rental Market Report: December 2023

There are indications that in 2024 the UK rental market will change. Rental demand is beginning to decline as rents approach their most affordable level.

London has seen the worst slowdown in rental growth, going from +17.0% a year ago to +9.0% currently. Because tenants in other regional areas can still afford increases based on average salaries, rents in those towns are keeping steady.

Rental market to turn in 2024

For the past three years, the private rental market has been characterised by a persistent mismatch between supply and demand. During this period, new rental prices in the UK have increased by a third, or £3,390 annually.
Now that rental growth has peaked, a significant decrease is anticipated in 2024. When rental housing becomes less affordable and the quantity of available properties increases somewhat, demand will decline.
Tenants’ opposition to higher prices is one indication that some markets’ rents are already set excessively high.

  • Average rents for new lets have risen 9.7% since a year ago

  • Demand for rental homes is down 11% on last year but still a third higher than the 5-year average

  • We expect rents to rise just 5% in 2024 as the market starts to cool

  • Rents in London will increase just 2% next year with renters unable to afford any further jump to already sky-high rents

  • Rents in regional markets where people can afford a rise to current rents will rise the most next year