Average lease FELL in six cities at begin of this 12 months, Zoopla says
- While rents have risen in past year, some cities began to see falls at start of 2024
- Overall, rents went up 6.6% in year to April – the lowest for two and a half years
- But rents are still outpacing growth in average earnings
Rents fell in several cities in the first three months of this year according to new data, which will come as welcome news to tenants following years of constant rises.
According to Zoopla, average rents have dropped in Nottingham (1.4 per cent) followed by Brighton at 1.1 per cent and York and Glasgow, both at 0.4 per cent.
They have also fallen by 0.3 per cent in Cambridge and London, as we head into the peak rental season between May and September.
Rent rises: While rents have gone up in every region over the last year, they have started to fall in recent month in cities such as Brighton. Meanwhile, Newcastle has seen a 10% annual rise
While the falls are modest, Zoopla said it provided ‘clear evidence that rental market dynamics are starting to turn’ in these areas.
Renters have had to contend with double-digit annual rises in recent years, during which time rents have risen faster than average earnings.
Between April 2022 and April 2023, the typical rent on a newly-let home went up by 10 per cent, a figure which fell to 6.6 per cent in April this year.
This was the lowest rate of rental inflation recorded by Zoopla for two and a half years.
The property website said this was driven by a fall in demand for rented properties.
Over the last year, the typical estate agent branch has seen demand for rented homes fall by 25 per cent – though there are still 15 households chasing every rental home, more than double the pre-pandemic average of six.
Slower growth: Rents went up 6.6% in year to April 2024, compared to 10% in previous year
Capital gains: London rents went up by 3.7% in last year – much less than most other regions
At the same time, the average number of homes for rent per estate agent has increased by almost a fifth (18 per cent) on this time last year – though it is still lower than before the pandemic.
Despite some localised falls in recent months, rents have still increased in every region of the UK on an annual basis.
The North East saw the biggest spike at 9.5 per cent, but still has some of the country’s cheapest rents at a monthly average of £704. In Newcastle alone, rents increased 10 per cent to £805.
Rents went up across all UK regions in the last year, but usually by less than the year before
It was one of only two regions, along with the South West, where average rents went up more in the last year than they did in 2022-23.
In Scotland rents rose 9.3 per cent across the last year to an average of £797. This came on top of a huge 13.4 per cent annual rise the previous year.
On the other end of the scale, Northern Ireland saw the smallest increase at 2.9 per cent, with the average now at £747.
London rents increased by 3.7 per cent, though they remain the highest in the country at an average of £2,122. In the previous year, average rents ballooned by 13.1 per cent.
Richard Donnell, executive director at Zoopla said: ‘The increase in the cost of renting has slowed to a 30-month low.
‘Rents continue to grow faster than average earnings, although the gap is much narrower than a year ago.
‘Rental demand continues to run well ahead of available supply, which is keeping the upward pressure on rents, but there are some areas where rental growth has stalled.’
Donnell added that the next Government should encourage more homes to be built if it wanted to cut costs for renters.
‘The number of private rented homes has been static since 2016 which has compounded the rise in rents over the last three years,’ he said. ‘More supply is the fastest route to easing the pressure on renters and improving the overall quality of rented homes.’
How do rents compare to earnings?
Rents for new lets have been rising faster than average earnings for more than two and a half years, since October 2021, according to Zoopla.
The gap between rents and earnings growth currently stands at 6 per cent, and falling rents mean it is starting to narrow.
However, rents are being supported by the fact little new private rented housing is being built, meaning demand still outweighs supply.
The picture varies across the country and much depends on how affordable rents are relative to local earnings.
However, there is a wide variation in how much of people’s average earnings are spent on rent.
Rents are currently rising fastest in the North East and Scotland, where rental costs account for the lowest proportion of gross earnings – meaning there is more headroom for landlords to increase them.
In contrast, London has the highest rents, and they account for a higher proportion of the average earnings.
These are now back to 2015 levels having fallen over the pandemic.
