Rental growth has slowed to its lowest level for nearly three years while demand has dropped by 39% during the past 12 months.

Rents for new lets have risen by 5.7% over the year to June, with the average UK rent now £1,232 per month, an increase of £66 compared to this time last year.

Rents went up by just 1.2% in the first half of the year, according to the latest rental market analysis from Zoopla, which reveals that average rents fell in several major UK cities including Nottingham (-0.6%), London (-0.4%), Brighton (-0.2%) and Glasgow (-0.2%). Its rental index tracks rental growth in 64 cities, and in 75% of these, the rate of rental growth is lower.

The supply of homes available for rent per letting agent is rising slowly; while agents have 17% more homes for rent than a year ago, the average agent still has a third fewer homes to rent compared to the pre-pandemic average.

Lower mortgage rates have made it a little easier for first-time buyers to buy homes and leave renting, while more new homes are being sold to corporate landlords for renting, reports Zoopla.

Selling up

A small but not insignificant number of private landlords continue to sell up in the face of a changing business environment and higher mortgage rates. This is acting as a drag on the total number of properties available to rent.

Richard Donnell (pictured), executive director at Zoopla, says renters will welcome the fact that rents for new lets are rising at their slowest pace for three years.

“Rents have risen so fast they have over-shot in some cities and we are seeing modest falls in rents in some cities as rents adjust to weaker demand and modest increases in the availability of homes for rent,” he adds.

“Rents continue to rise more quickly in more affordable areas adjacent to large cities as renters seek better value for money.”

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