The pace of rental growth in the UK is slowing down, providing some relief for tenants who have experienced steep increases in recent years. According to a December rental market report from property site Zoopla, rents are expected to rise by 5% in 2024, which is half the rate of growth seen in 2023. This is the lowest growth rate since September 2021.

Factors contributing to the easing of rental growth include a combination of prolonged high demand, constrained supply, and landlords passing on the costs of higher mortgage interest rates. While rents are not expected to decline, the 5% growth rate represents a slowdown.

Nationally, rents for new lettings have increased by 9.7% over the past 12 months, down from 11.9% a year ago. Asking-rent reductions, where landlords lower rents to attract more applicants, increased by 5%. In London, 10% of listings made reductions in asking-rents of more than 5%, compared to 7% across the UK.

The average UK rent is now £1,201 a month, with higher averages in London (£2,049), Oxford (£1,611), and Brighton (£1,565). London rents are expected to rise by only 2% in 2024, down from 9% in 2023 and 17% in 2022.

Rental growth in Scotland, however, has continued to climb at 12.9%, with rent controls likely contributing to the increases.

Despite the slowdown in rent growth, rents still account for a significant portion of tenants’ earnings, with the average UK renter spending 28.4% of their income on rent, down from 35% the previous year.

While rent rises are slowing, other factors such as landlords selling properties and people returning to cities after the pandemic are helping to keep rents high. The article notes that there is still an underlying mismatch in the rental market between the number of people seeking to rent and the number of available homes.

According to Hamptons, millennials dominate the rental market, spending £36.9bn in 2023. Higher interest rates in the medium term are expected to lead more millennials to rent for longer, with the rate of climbing onto the housing ladder slowing down. As a result, millennials are starting families and renting larger, more expensive homes, contributing to the overall increase in the amount of rent they pay.