A rise in properties on the market means rents for new lets have grown by their slowest rate in nearly three years this year, and are expected to fall below wage growth for this first time since 2021, an analysis has revealed.
Rents for new lets grew by 5.7 per cent in the 12 months to June 2024, according to the property portal Zoopla, the lowest since 21 October.
The slower rise has taken the average UK rent to £1,232 per month, up £66 compared to the same time last year.
The lettings market has been on a tearaway streak since the end of the pandemic, with rents having grown by 12.9 per cent in the 12 months to June 2022 and 9.8 per cent the year after that.
The runaway rises – which spanned across much of the country – had been attributed to a combination of growing demand pressures due to renters struggling to get on the housing ladder and falling supply after a spate of buy-to-let landlords were forced to sell their homes as interest rates rose.
But the latest figures represent a significant cooling of the market – previously dubbed “red hot” by Zoopla – with rents growing by just 1.6 per cent in the first half of 2024, the lowest rate since 2020.
In some regions – including London – rents fell. Having capital had the second worst performing lettings market, with prices down 0.4 per cent. Nottingham rents were down the most, falling 0.6 per cent.
Notably, the slowdown was in part down to an improvement in supply of homes available to rent. Agents reported having 17 per cent more homes available for rent than a year ago, thanks in part to more new homes being sold to corporate landlords in the burgeoning build-to-rent sector.
Richard Donnell, executive director at Zoopla, said: “Renters will welcome the fact that rents for new lets are rising at their slowest pace for three years.
“Rents have risen so fast they have over-shot in some cities and we are seeing modest falls in rents in some cities as rents adjust to weaker demand and modest increases in the availability of homes for rent.
“Rents continue to rise more quickly in more affordable areas adjacent to large cities as renters seek better value for money.”
With annual wages up 6.4 per cent in May, according to the Office for National Statistics, rent growth across the country is expected to come in lower than uptick in wages in 2024.
If this comes to pass, it would be the first time in three years that the lettings market grew slower than wages, providing some “modest relief” for renters, Donnell said.