Average advertised rents in London are now 5.3 per cent higher than last year, but there are signs that the pace of price increases is slowing, a leading property portal has found.
Rightmove data published on Tuesday showed rental prices climbed by two pounds in the first three months of the year to a record high of £2,633 per month.
While rental costs in the capital remain elevated, growth on rents has steadily slowed since the peak of 16.1 per cent in the third quarter of 2022.
Many renters are likely to still struggle with costs and finding an affordable place to live due to poor wage growth- which has left employees in London around £50k worse off since 2010 – and rises in other household expenses.
When compared to the rest of the UK, average rents outside of London rose to a new record of £1,291 per calendar month, with the cost now 8.5 per cent higher than last year.
The number of available rental properties is 11 per cent higher than last year, but 26 per cent below 2019, with Britain’s 50,000 homes behind the pandemic.
Tim Bannister, director of property science at Rightmove, said: “The rental market is no longer at peak boiling point but it remains at a very hot simmer.
“Looking at data across the whole market, we can see some slow improvements for tenants with more choice, and competition with other tenants slowly starting to ease.”
He added:”The fact that even with some improvements to the level of supply, we are still nearly 50,000 properties behind the pre-pandemic market, is a stark reminder that the industry needs more good quality rental homes, and we need to encourage investment from landlords to provide them.”
Consistent interest rate hikes made by the Bank of England last year in efforts to reduce inflation have damaged the entire ecosystem of the housing sector.
Landlords began either selling their properties to dodge rising mortgage payments – limiting the pool of supply – or passing high costs onto their tenants.
An improvement in the overall sentiment in the property market this year will hopefully lead to further would-be-buyers making a purchase, freeing up some space in the rental market.