Monthly rental costs fell by 0.9% across the UK during December and by 2.2% in Greater London - one of the biggest drops seen in 2023, according to HomeLet.

However, it warns that this needs to be viewed in the wider context of an 8% jump across the UK in the last year and a 19% rise since 2021 – the equivalent of more than £200 extra per month. In Scotland and Greater London, the figures are 23% and 21% respectively.

HomeLet reckons that tenants are now forking out just under 35% of their monthly wages on rent, a 2% increase since last year. In Northern Ireland, the figure has grown by 10% in a year, rising to 38%.

Short-term win

Andy Halstead, HomeLet & Let Alliance CEO, believes that while these figures can be viewed as a short-term win for tenants, they don’t represent a breakthrough.

“While we are cautiously optimistic that things can improve for the UK rental sector, it’s too early to talk about an upturn in fortunes just yet,” he says. “Of course, marginally lower rents put slightly more money in tenants’ pockets and partially reduce the likelihood of defaults, but the broader landscape is still incredibly challenging for all parties – with little sign of easing.”

Rising costs

Without dramatic changes, 2024 looks set to bring more of the same, forcing landlords to do battle with a familiar array of struggles, including a lack of stock, rising costs and prohibitively expensive buy-to-let mortgage rates, he explains.

“Combined with lingering high inflation and the country’s financial crises, it’s unlikely we’ll ever see rental prices drop to the rates they were at when we were exiting the Covid-19 pandemic,” adds Halstead. “The impact of that, alongside questionable budget decisions and overall weak management of British finances, means that we estimate by this time in 2025, rent increases of between 5-10% won’t be surprising.”