Average private rents in Great Britain have fallen for the first time in five years, signaling a potential shift in the rental market dynamics. Furthermore, recent data indicates that average rent on newly let properties fell by 0.2% y-o-y in July. This is no small shift, particularly in light of the record rent increases we’ve experienced over the last few years.
In Greater London, for instance, rents dropped by 3% compared to the previous year, removing a big part of the overall drop. That sudden drop has affected statewide, but particularly felt in the northern tier. Consequently, the national average has now tanked all the way into the red. So even with this national reduction, seven of Great Britain’s eleven regions are still experiencing rising rents.
The East Midlands leads the way with the highest rise at 3.4%. In third, the West Midlands are not far behind with 2.7%, and in fourth, south-west England completes the set with a 2.6% increase. Such regional differences illustrate a continued strong demand driven by migration to some areas, even as other emerging markets start to cool.
In Wales, rents dropped for the third consecutive month in July. Geographical areas such as north-east England and Yorkshire and the Humber registered decreases. By September 2023, the median rent for a new let across Great Britain had hit £1,373. This figure is £350 extra and 34% higher than in August 2020.
… we are seeing a rental market that is metamorphosing before our eyes.” -Aneisha Beveridge, head of research at Hamptons
“After five years of relentless rent rises, the market has paused for breath.” – Aneisha Beveridge
While some localities may exchange rent reductions, the current landscape of renewed leases nationally seems dim with a large surge. Average rents for these renewed agreements increased by 4.5% year on year in July, indicating continued demand for existing rental properties.
One key reason fueling these changes are the dramatic increases in available rental stock. Local reports indicate that they are 15% more rentals now than this time last year. Tenants have benefited from this incredible surge in availability which has given them more choice and negotiating power, helping diminish rent increases as landlords compete for tenants.
Beyond inflation and pandemic-related factors, lower mortgage rates have had a significant impact on transforming the rental landscape. As borrowing costs have come down, some prospective renters are now able to buy their first home, which lowers demand for rental units. This change would lower downward pressure on rental prices since there are fewer prospective renters competing for each vacated unit.
The rental market is finally moving past the pandemic craziness. Though considered a leading manmade disaster by experts, they argue it is now finally entering a more stable period. Some parts of the country continue to see rents increasing dramatically. Still, the general cooling trend may be a sign of a new normal for renters and landlords alike.