Your 2024 rental market round-up

Rental growth

In the 12 months to August 2024, average rents increased by 8.4% in the UK, marking a period of steady growth for the market. This upward trend reflects a surge in tenant demand. With a growing population and ongoing challenges in homeownership affordability, more individuals are opting to rent, intensifying competition for available rental properties. The strong rental growth may continue as supply remains constrained in many regions, making this a key trend for both tenants and landlords alike.

Interest rates

On October 3rd, 2024, the Bank of England's base rate fell to 5%. This was a highly-anticipated decrease from the previous rate of 5.25%, which was the highest level in 16 years. The base rate is crucial as it influences the borrowing costs for banks and lenders, which then impacts interest rates on a wide range of financial products, including mortgages, loans, and personal credit. Homebuyers and property investors are particularly sensitive to these changes, as mortgage rates typically move in line with base rate adjustments. With the base rate falling rather than rising, securing a mortgage has become more attainable this year.

Renters’ Rights Bill

Following the Conservative government’s decision to shelve the Renters' Reform Bill, which had proposed extensive changes to the rental market, the Labour Party has committed to introducing new legislation through the Renters' Rights Bill. This reform is aimed at rebalancing the power dynamic between tenants and landlords, ensuring that renters have more stability in their living arrangements, while landlords have clearer legal frameworks to follow. As housing policies continue to evolve, both tenants and landlords will need to stay informed on how these legislative changes may impact the rental landscape.

Landlords needed

Despite gradual improvements in the overall supply of rental properties, the market remains strained. The number of available rental homes is still 20% below pre-pandemic levels***, creating a significant supply gap. This shortfall offers a prime opportunity for potential investors, as high demand combined with limited supply is likely to sustain rental price increases in many regions. For new landlords or those looking to expand their portfolios, entering the market at this pivotal time could prove beneficial. With fewer homes available, renters face intense competition for properties, particularly in urban areas and regions experiencing population growth. This dynamic makes the rental sector an attractive option for investors seeking strong returns.  

ONS* Bank of England** Zoopla**