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Rental growth slows but demand remains “out of control” and rents “unaffordable”

UK rental growth has slowed to a modest +0.2% increase from April to May, according to the latest HomeLet Rental Index. Despite this slight deceleration, renters continue to face record-high rents, averaging £1,297 per month, with experts warning that demand remains “out of control” and rents “unaffordable”.

Regional Variations and Slowing Growth
In a rare positive turn for renters, the report highlighted rent decreases in several UK regions, including the North East (-1.6%), South West (-1.4%), Greater London (-1.3%), and Yorkshire and Humberside (-0.5%). Furthermore, the annual rate of rental growth has slowed to +6.9%, the lowest since August 2021. However, industry experts caution that these changes are not indicative of a broader trend, particularly with the impending General Election.

Industry Concerns and Government Criticism
Andy Halstead, CEO of HomeLet and Let Alliance, voiced his concerns about the current state of the Private Rented Sector (PRS). He stated, “As summer approaches it looks like business as usual in the private rental sector: shortage of supply, demand out of control, and high rents that are, in many instances, unaffordable. Meanwhile, the politicians focus on attempting to win votes with blatant untruths. This government has not supported our sector and I suspect the next government will be equally unhelpful.”

Halstead also pointed out the challenges faced by professional letting agents, noting, “Professional letting agents make the best of a difficult situation. However, it is no wonder we are seeing record levels of letting agent consolidation, and landlords considering alternative investment options.”

Broader Implications for Renters
The HomeLet Rental Index, recognised as the most reliable source of actual rental fee data in the UK, underscores the growing challenges within the PRS. With demand significantly outstripping supply, many renters find themselves in increasingly precarious situations. As the average UK rent hits unprecedented levels, the affordability crisis deepens, leaving both current and prospective tenants in a bind.

In conclusion, while the slight slowdown in rental growth offers a glimmer of hope, the broader issues within the PRS persist. The impending General Election adds further uncertainty, with many industry stakeholders sceptical about future government support. As Halstead’s comments suggest, without substantial intervention, the cycle of high demand and unaffordable rents is likely to continue, exacerbating the challenges faced by UK renters.