In the last three months of 2024, average rents saw a slight drop for the first time since 2019, as tenants, feeling the pinch, opted to stay put rather than face the costs associated with moving. This shift in behaviour was particularly evident outside of London, where typical advertised rents fell by 0.2% to £1,341 per month, a reduction of £3 according to Rightmove’s data.

Although this drop may seem minimal, it marks the first quarterly decline in rents since before the pandemic began. During the July to September 2023 period, rent increases were at their peak, with tenants being asked to pay 3.8% more than the previous quarter. Prior to this, rents had been on an upward trajectory, reaching new record highs for 19 consecutive quarters.

When comparing rents to the same period last year, the figures show a 4.7% increase. However, this rate of growth is the slowest seen since 2021, highlighting the cooling of the market. Rightmove referred to this slowdown as a ‘key milestone for the market’, especially considering that at one point in 2022, rents were increasing by as much as 12% year-on-year.

In London, rents saw a modest increase of just 0.1% in the last quarter, reaching £2,695 per month. While this marks an upward trend, it remains significantly lower compared to previous periods of rapid growth.

Alex Bloxham, partner and head of residential lettings at estate agent Bidwells, commented on the shift, stating: “We’re seeing a cooling of what has been a ferociously hot rental market over the last year, where tenants have endured intense competition and consistent rental inflation.”

The peak of rental increases occurred during the July to September 2023 period, when tenants faced a sharp 3.8% rise in just three months, illustrating the high level of inflation in the market at that time.

Why aren’t rents going up as much? 

According to the property portal, more tenants are choosing to stay in their current rented homes rather than seeking new properties. One potential reason for this shift is the fear of facing higher rents on a new tenancy compared to their existing one.

Alex Bloxham explained: “These figures suggest landlords are continuing to invest in their buy-to-let portfolios, while more tenants are choosing to stay put, likely due to continued macroeconomic uncertainty and the upfront costs involved in relocating.”

Additionally, the number of prospective tenants looking to move has dropped by 16% compared to the same time last year. However, Rightmove also reported that supply in the rental market continues to rise, with the number of available properties now 13% higher than a year ago. This increase in supply helps ease rental price pressures, as there is less competition for each available home.

Moreover, a greater number of tenants may now be able to step onto the property ladder, supported by more stable mortgage rates and higher average wages. John Baybut, managing director at Berkeley Shaw Real Estate in Liverpool, commented on the shift: “We’ve seen a levelling off in demand from tenants, due to many factors, including the end of the post-pandemic surge for new rental requirements, and some demand heading to the sales market.”

He further noted, “Tenants are paying very high rents, so with more supply on the market now, some are being more ‘choosey’.”

Where have rents reduced the most? 

Tenants in Scotland experienced the largest fall in asking rents during the last three months of 2024, with a significant reduction of 1.9%. Similarly, renters in the South West of England saw a notable decrease of 0.9% in asking rents, while those in the South East (excluding London) experienced a drop of 0.6%.

The West Midlands also saw a slight dip in asking rents, with a marginal reduction of 0.1%. However, renters in the North East were less fortunate, as asking rents in this region increased by 2.2% between October and December 2024. This rise was notably higher than in any other part of the country during the same period.

Over the past year, asking rents in the North East have risen by 9%, though it remains the most affordable area in the UK for renting, with an average cost of £942 per calendar month.

In contrast, London has seen the smallest increase in average rental prices, with a rise of just 2.4% on an annual basis.

Colleen Babcock, a property expert at Rightmove, commented: “While this gives an overview of the market, agents on the ground continue to report that the market is still very competitive. Some areas have seen greater improvements than others in terms of supply and demand balance.”

She added: “Our data shows that the average rental property is still receiving 10 applications per property, which is lower than the peak but still double the pre-pandemic average.”

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