Rental Market Sees First Drop in Rents Since 2019 – What It Means for Landlords & Tenants

The UK rental market has experienced its first decline in advertised rents since pre-pandemic 2019, signalling a potential shift in market dynamics. According to Rightmove, the average advertised rent outside of London has dropped by 0.2% this quarter to £1,341 pcm, marking a turning point after years of continuous growth. While rental prices remain 4.7% higher than this time last year, this is the slowest growth rate recorded since 2021.

In contrast, London’s rental market continues to rise, reaching another record high of £2,695 pcm, though the increase was just 0.1% this quarter.

Why Are Rents Dropping?

One of the main factors influencing this cooling of rental prices is the steady increase in rental supply. The number of available rental properties across the UK has grown by 13% compared to last year, improving the balance between supply and demand. This is giving tenants more choice and slightly more negotiating power, particularly in regions where supply has increased significantly.

At the same time, tenant demand has fallen by 16%, with fewer prospective renters actively looking for a new home. Several factors contribute to this shift:

• More tenants staying put to avoid moving costs.
• First-time buyers transitioning to the sales market due to falling mortgage rates and rising wages.
• Landlords adjusting their portfolios, with some exiting the market while others expand their investments.

Regional Differences in Supply & Demand

While rental supply is increasing across most of the UK, the impact varies by region. The North East has seen the largest improvement in available rental properties, with a 30% increase, while Wales has experienced the smallest growth at just 3%. This means tenants in the North East may have more options and competitive pricing, whereas those in Wales may still face supply shortages.

Despite these changes, competition for rental homes remains high, with an average of 10 applications per rental property—double the pre-pandemic average.

 Are Landlords Leaving the Market?

There are no immediate signs of a mass landlord exodus, despite ongoing regulatory and financial pressures. The number of new rental properties entering the market remains stable compared to last year. However, 15% of homes for sale were previously rental properties in 2024, up from 13% in 2023, indicating that some landlords are opting to sell.

This trend is most evident in London, where nearly one in four homes for sale were previously rental properties. While this suggests some landlords are cashing out, it also presents opportunities for investors looking to expand their rental portfolios.

The Impact of the Renters’ Rights Bill

With the Renters’ Rights Bill potentially coming into effect later this year, both landlords and tenants are preparing for significant changes. While the bill aims to provide greater security and rights for tenants, it also introduces new compliance requirements for landlords.

So far, there are no major signs of this upcoming legislation affecting rental supply, but it remains a key factor to watch in the months ahead. Some landlords may choose to adapt and stay in the market, while others may see it as an opportunity to exit and sell their properties.

What This Means for Landlords & Tenants

For landlords, the slight cooling in rent prices means that competition among rental properties may increase. Ensuring properties are well-maintained, competitively priced, and marketed effectively will be key to securing reliable tenants. With demand still outpacing supply, particularly in city markets, rental investments remain a strong opportunity.

For tenants, the improvement in supply offers more choices and better negotiating powerin some regions. However, competition remains fierce, and securing a rental home still requires quick decision-making and strong applications.

Looking Ahead

While the rental market is showing signs of stabilisation, it remains highly competitive. Whether you’re a tenant looking for a home or a landlord seeking expert management, RentLife is here to help. We provide expert lettings services, property management, and market insights to help you navigate the changing rental landscape.

Source: Rightmove 

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