The latest figures reveal a minor decline in rental prices across the UK, with an exception in the East Midlands. The HomeLet data indicates a -0.9% decrease in monthly rental costs nationwide, and a more pronounced 2.2% drop in Greater London, translating to about £50 less per month for tenants.
Despite this trend, the rental market remains challenging. HomeLet & Let Alliance CEO, Andy Halstead, reflects on the past year, noting, “January is a good time for us to reflect on the previous year with our HomeLet Rental Index and make predictions as to what is to come in 2024. The New Year starts with restrained optimism, as our records show a minor decrease in monthly costs for the second month in a row.”
The decrease, however, doesn’t mask the steep increases of the past. Halstead adds, “Monthly rents increased by 8% in the matter of a year and have soared nearly 20% since 2021. So, whilst we are cautiously optimistic that things can improve for the UK rental sector, it’s too early to talk about an upturn in fortunes just yet.”
The report highlights the significant rent hikes over the last two years, with Scotland and Greater London exceeding 20% increases. The average UK tenant now spends 33.4% of their monthly income on rent, a 2% rise from last year, while Northern Ireland sees a more alarming 10.7% increase.
Halstead offers a realistic outlook for 2024, stating, “Unless we see some dramatic changes, 2024 looks set to bring more of the same.” He points to persistent challenges such as high inflation, financial crises, and costly buy-to-let mortgage rates, suggesting that rental prices are unlikely to return to post-Covid-19 pandemic levels. He predicts a potential 5% – 10% increase in rents by 2025.
The CEO concludes with a note of cautious optimism: “To see a small decrease in rental prices across the country this month has been a pleasant surprise. For the sake of the UK’s renters, we hope that this trend continues into 2024.”