Editor's note: This brief was summarised by The Property AI Team from a report by PropertyWire. Read the original article for full details.
UK rental prices reach new highs as supply falls
Average advertised rents outside London have reached £1,418 per calendar month, a new record, according to Rightmove data. Asking rents rose 1.5% this quarter, though annual rental growth has moderated to 2.4%.
Nationally, the number of available rental properties has fallen by 2% compared with a year ago, while tenant demand has also declined by 2% over the same period.
London market tightens further
In the capital, average advertised rents have climbed to £2,825 per calendar month, with annual growth of 3.2%, exceeding the national rate outside London. London faces a more acute supply shortage: total available rental listings are down 9% year-on-year, newly listed properties are down 7%, and tenant demand is up 6% compared with last year.
Lower-priced areas across Britain are experiencing the fastest rental growth rates, though London ranks as the third fastest region for annual rental increases.
Landlord activity remains stable
The proportion of homes for sale that were previously rented stands at around 13% this year, up marginally from 12% last year, suggesting landlord exits remain relatively stable. However, the proportion of rental properties that were previously for sale has decreased from 17% to 15%, indicating reduced new landlord investment in the sector. This trend comes as younger generations increasingly view home ownership as essential, potentially reducing the pool of long-term renters.
Colleen Babcock, property expert at Rightmove, said: “Average rents have reached another new record and have now surpassed £1,400 per month outside London for the first time. However, beneath the headline figure, rental growth has continued to settle compared with the exceptionally fast pace we saw a few years ago.”
She added: “Supply remains constrained, which is continuing to put upward pressure on rents, but demand is also more measured. That has helped to create a more balanced market overall, even though affordability remains a challenge for many renters.”
Kim Lidbury, President of ARLA Propertymark, noted that rental market health cannot be judged solely on growth rates. “Although rental growth has moderated, advertised rents remain at record levels, and the availability of suitable homes continues to be a major concern for tenants,” she said.
Lidbury highlighted that financing costs, taxation and regulatory requirements continue to influence landlord decisions on whether to invest in, retain or sell rental properties. With affordability improving in some segments of the sales market, landlords face additional considerations when evaluating their portfolios.
Outlook
Persistent supply constraints and record-high asking rents continue to challenge tenant affordability, even as rental growth slows from previous years. Without significant increases in available rental stock, upward pressure on rents is likely to persist despite more moderate growth rates.
Source: PropertyWire