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Article Summary
Buy - to - let
- The past year has witnessed a 9% increase in average monthly rent, contributing an additional £1,200 to the average annual rental bill.
- London saw an average rental price increase of £157 pcm, totaling an average rental price of £2,128
- The surge in people seeking accommodation, coupled with lack of available properties, creates an opportunity for investors to see increased yields.
Introduction
The landscape of the UK rental market has undergone a noteworthy transformation over the past year, marked by a 9% increase in average monthly rent.
In this article, we aim to dissect the factors contributing to these shifts, explore the regional intricacies, and gaze into the future of the UK rental market in 2024. As we navigate the complexities of rising rents and changing market dynamics, tenants, landlords, and investors alike are presented with a landscape that demands a strategic approach and adaptability.
The past year has witnessed a 9% increase in average monthly rent, contributing an additional £1,200 to the average annual rental bill. Renters are now paying an average of £1,200 per month, varying from £672 in the North East to £2,128 in London.
In 2023, new lets reached £1,200 in November, marking a 9% increase from the previous year. This translates to an additional £1,200 annually, equivalent to a month’s worth of rent.
The Zoopla Rental Index, providing data up to November 2023 and published in January 2024, reveals regional variations in rental increases across the UK. The North-West took the top spot for rental increases in England, seeing an average rise of 12.1%.
Though the capital city, London, featured quite low on the list, the average rental price increased by a staggering £157 pcm, now up to £2,128. Rising by 8% in the last year, with Inner London boroughs experiencing the most significant moderation. The rest of the South-East have seen even higher rental price rises of 8.6%.
|
Region
|
Annual Rental Increase (%)
|
Annual Rental Increase (£)
|
Average Monthly Rent
|
|---|---|---|---|
|
North-West
|
10.8%
|
£81
|
£831
|
|
North-East
|
9.7%
|
£60
|
£672
|
|
East Midlands
|
9.7%
|
£75
|
£846
|
|
East of England
|
9.5%
|
£99
|
£1,145
|
|
South-East
|
9.3%
|
£110
|
£1,294
|
|
West Midlands
|
8.8%
|
£72
|
£883
|
|
South-West
|
8.6%
|
£83
|
£1,061
|
|
London
|
8.0%
|
£157
|
£2,128
|
|
Yorkshire
|
7.7%
|
£56
|
£750
|
Zoopla Rental Index for regions in England, data to November 2023 published in January 2024
Looking ahead, the rental market is expected to see further growth in 2024. Though initially there was a small dip predicted in house prices this year, experts have now stated we’re on track to see a 3% rise – which will most likely be reflected in the rental market too.
What causes rental prices to rise?
Fundamentally, the primary catalyst for the increase in rental prices is the persistent imbalance between demand and supply, a phenomenon particularly pronounced in burgeoning urban centres. The surge in people seeking accommodation in a given area surpasses the rate at which available properties are added to the market. A case in point is the notable uptick in Manchester’s popularity, coupled with an absence of additional properties. This scenario provides landlords with a strategic advantage, allowing them to increase rental prices without missing out on tenant demand, therefore resulting in heightened yields.
Conclusion
In conclusion, the past year has marked a significant shift in the UK rental market, with an overall 9% increase in average monthly rent. This upward trend, contributing an additional £1,200 annually to the average rental bill, has regional nuances, with the North-West experiencing the highest rise at 12.1%. London, while showing a relatively lower percentage increase, sees a substantial monthly rise of £157, bringing the average rent to £2,128.
As we move into 2024, the rental market is poised for continued growth, aligning with the anticipated 3% rise in house prices. Despite initial predictions of a slight dip, experts now foresee a positive trajectory, suggesting that this upward momentum will likely impact the rental market as well. These insights underline the dynamic nature of the UK rental landscape, prompting renters and investors alike to navigate an evolving market in the year ahead.
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From £249,950
Yield: 13.5%
In Construction
Est. Q4 2024
Lease Length: 250 Years
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