The recent cut to the Bank of England’s base interest rate has triggered a significant rise in the number of rental properties entering the market across major UK cities. Research by Zero Deposit, a tenancy deposit alternative provider, has revealed that the availability of rental homes has soared in the 30 days following the first rate cut in four years, offering some much-needed relief to tenants struggling with limited housing options.
Major UK cities see sharp rise in rental stock
Zero Deposit’s analysis of 15 major British cities shows that the level of available rental stock has surged, with cities such as Edinburgh, Glasgow, and Manchester seeing notable increases. Edinburgh experienced one of the largest spikes, with 435 rental homes entering the market in just 30 days—equating to 75% of the city’s current rental stock and marking a 300% rise compared to levels prior to the base rate cut.
Glasgow followed closely, with a 207% increase in new rental listings, accounting for 67% of the current stock. Other cities like Bradford, Bristol, and Brighton also saw rental stock levels more than double, with increases of 137%, 135%, and 130%, respectively. Manchester and Cardiff both experienced a 119% rise in available rental properties, while Sheffield saw a 109% boost.
Even in Leeds, where the increase has been more moderate, the city added 576 new rental homes, marking a 45% rise compared to previous levels. These new listings make up 31% of the city’s current rental market stock.
Interest rate cut stabilises market for landlords
The interest rate cut, reducing the Bank of England’s base rate from 5.25% to 5%, has provided a boost to the rental market after years of economic strain on landlords. Many property owners have faced high interest rates, which led to increased pressure and even prompted some to consider leaving the sector entirely. However, the rate cut seems to have steadied the market and encouraged more landlords to list their properties.
Sam Reynolds, CEO of Zero Deposit, commented on the impact: “For almost four years, landlords across the UK have had to contend with far higher interest rates than they’ve become accustomed to, not to mention the challenges that this brings. We know from a recent survey by the Royal Institution of Chartered Surveyors that this has caused many to increasingly consider exiting the sector.”
Reynolds continued: “However, it certainly seems as though the first base rate cut in over four years has helped to steady the ship and spur a substantial increase in the number of rental homes reaching the market. This is, of course, great news for tenants, who stand to benefit from a greater level of rental market stock across our major cities.”
Uncertainty looms as Budget concerns grow
While the recent surge in rental properties is positive news for tenants, there are concerns that this newfound market stability may be short-lived. With the Labour government set to introduce what is expected to be a “painful” Budget in October, the potential for new tax changes could significantly impact landlords. Inheritance tax and capital gains tax are both expected to feature heavily in the upcoming Budget, which could dampen the recent optimism in the rental market.
Reynolds acknowledged this uncertainty, stating: “Of course, with our new Labour Government stating early that inheritance tax and capital gains tax could both feature heavily in what is expected to be a ‘painful’ October budget, this increasing market level of rental market sentiment could be somewhat short-lived.”
As landlords brace for the potential financial impact of the upcoming Budget, the future of the rental market remains uncertain. For now, however, the recent interest rate cut has provided a temporary boost in rental property availability, offering tenants more options in a market that has been strained for several years.
The coming months will be crucial for both landlords and tenants as they navigate the impact of possible tax changes and market fluctuations.
