Average rents fall for the first time since 2019
After years of consecutive rises in average rents, our latest Rental Trends Tracker reveals the first quarterly drop in asking rents since before the pandemic.
The average rent outside of London is now £1,341 per month, marking a small decrease of 0.2% compared to the previous quarter. And while this might only be a £3 drop, it’s an important turning point after years of sustained price growth. We’re also seeing an improvement in the number of rental homes available – showing an easing of the pressure we’ve seen in the rental market in recent years.
What happened to rental prices recently?
The drop in average rents is the first decrease since 2019, bringing an end to consecutive years of record-breaking rents. While prices are still 4.7% higher than this time last year, this is the slowest rate of growth we’ve seen since 2021. And considerably less than the peak of 12% annual growth we saw in 2022.
The picture in London is slightly different. Rents have reached a 13th consecutive quarterly record of £2,695 per month. However, the pace of rental price growth has slowed significantly, with just a £1 increase (+0.1%) this quarter. In inner London, the average monthly rent is now £3,180, while outer London stands at £2,341.
One of the main reasons for this slowdown is that there are now more properties available for renters to choose from. Across Great Britain, there are 13% more rental homes on the market compared to the same time last year and at the same time, the number of people looking to rent has dropped by 16%.
What do the experts think?
Our property expert, Colleen Babcock, sees positive changes in the market balance. She says: “While new tenants are still paying more than they were at this time last year, the pace of growth continues to slow.” However, she notes that “the market is still very hot” in many areas, with rental properties receiving an average of 10 applications – double the number we saw before the pandemic.
This varied picture is similarly seen by estate agents. John Baybut, from Berkeley Shaw Real Estate in Liverpool, has observed changing patterns in the market: “We’ve seen a levelling off in demand from tenants, due to many factors including the end of the post-pandemic surge for new rental requirements, and some demand heading to the sales market.” However, he also notes that with more supply available, some tenants are becoming more selective about their choices.
As we often see, trends are playing out differently across the country. North East has seen the biggest improvement in available properties, with 30% more homes to rent than last year, while Wales has seen just a 3% increase in supply. And some areas have seen significant rent increases despite the overall slowdown – in Durham, rents are up 26% annually to £889 per month, while Birkenhead has seen a 16% rise to £750.
What’s the outlook for the 2025 rental market?
Looking ahead, there are signs that the market is gradually becoming more balanced. The upcoming Renters’ Rights Bill could bring significant changes later this year, though we’re not seeing any major impact on the market yet. The number of new properties coming to the rental market has remained stable compared to last year, suggesting neither a sudden influx of properties, or a mass exodus of landlords.
There is some evidence of landlords choosing to sell their properties – around 15% of homes for sale in 2024 were previously rental properties, up from 13% in 2023. This is particularly noticeable in London, where nearly one in four homes for sale (24%) were previously rented out, compared to one in five (20%) in 2023.
For now, agents report that some tenants are choosing to stay in their current properties rather than move. On the landlord side, we’re seeing mixed behaviour – some are leaving the market while others, particularly larger landlords, are continuing to invest. This suggests we’re likely to see a period of adjustment as the market responds to these changing dynamics.
Tips for finding your next rental home
Even though the market is becoming more balanced than we’ve seen in recent years, rental homes continue to be in high demand, with each property receiving an average of 10 applications.
If you’re looking to rent soon, here’s how to give yourself the best chance of securing the home you want:
- Act quickly: Set up instant property alerts on Rightmove and build relationships with local letting agents. Being among the first to know about new properties can make a big difference.
- Know your priorities: Be clear about your must-haves, including your maximum budget and the number of bedrooms you need. With more properties available, you might have more choice, but knowing exactly what you want will help you move quickly when you find the right place.
- Be ready with paperwork: Have all your documentation prepared, including references and proof of income. This can help speed up the application process once you find a property you like.
- Consider different areas: With rental costs varying significantly between areas, being flexible about location could help you find better value. Some of the most affordable cities for renting include Durham, Birkenhead, and Hartlepool, which have average rents below the national average.
- Be flexible where possible: If you can be flexible with move-in dates or other terms, this might make your application more attractive to landlords.
The header image for this article was provided courtesy of Foxtons, Maida Vale.