An additional 120,000 homes are needed to fix Britain’s broken private rental market, Rightmove has warned, after revealing that advertised rents have hit new record highs.
The average rental price on the market has hit £1,316 a month outside London, rising 7% in the last year. In London renters can expect to see average rents of £2,652 a month advertised.
Although the pace of rental growth has slowed, a mismatch between supply and demand is preventing it from returning to what Rightmove called “normal growth” of around 2% per year – in line with the Bank of England’s inflation target.
The next government must accelerate housebuilding and incentivise landlords to invest in more homes to bring 120,000 rental homes on to the market and address the supply issue, according to Tim Bannister, Rightmove’s property expert.
“We’ve been talking about the imbalance between supply and demand in the rental market for a long time now, so it’s easy to forget that there was a time before the pandemic where rental price growth was more stable,” said Bannister.
“Double-digit yearly rent increases were not sustainable, and, while there has been some improvement in the ratio between supply and demand, price growth at 7% suggest we are still out of balance.”
The UK has been gripped by a rental crisis for some time but different parts of the country are affected in different ways.
Overall, the 7% rise in average advertised rents outside London is much lower than the peak of 12% two years ago but is still stretching renters’ pockets to the limit.
Despite much-higher prices than elsewhere, advertised rents in London are rising at a slower rate than almost everywhere in the UK at 4% above last year, down from an 18% surge in 2022.
That’s due to an improving supply and demand imbalance, according to Rightmove, with a 15% fall in the number of tenants looking to move to London and an 16% increase in properties on the English capital’s rental market.
The biggest imbalance between supply and demand is seen in Scotland.
Pro-landlord groups have long warned of an exodus of private landlords from the sector, citing tax changes, the failed introduction of the Renters Reform Bill and the promise of rent controls in Scotland.
However, this claim is disputed by pro-renter groups citing a lack of evidence of landlords leaving the sector so far. Meanwhile, Scottish renters union Living Rent have urged the Scottish government to deliver on its commitment to introduce robust rent controls and cap surging rents.
Nathan Emerson, chief executive of Propertymark, a group representing property agents, said: “Propertymark has long argued that the private rental sector needs more houses to stabilise rental prices, but there are a myriad of other factors that can contribute towards making the market more attractive for both investors and tenants.
“With a general election coming this week, Propertymark would like to see the next government reform the tax system so that more investors can be persuaded to invest in the private rental sector and lower rents for tenants in the long-term. Whilst we support a greater supply of houses, there has to be a sensible deliverable programme mindful of protecting the green belt wherever possible. It would also be wise for them to avoid rent controls which have had a devastating effect on the private rental sector in Scotland.”
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