More than one in 10 homes for sale on Zoopla in July (12.5%) were formerly rented, prompting fears that a challenging autumn budget could further increase sales of rented homes.

Twenty-one tenants are now competing for each rental property, more than twice the pre-pandemic average, according to the platform’s latest rental market report, which reveals a continued mismatch between supply and demand, with the number of homes for rent still 24% below pre-pandemic average.

Rental growth for new lets currently stands at 5.4%, half the rate compared to a year ago but still higher than the growth in average earnings (5.1%) while average rents hit £1,245 per month in July, £63 per month higher than a year ago. Demand is likely to run at above average levels for the remainder of 2024, with rents expected to be 3-4% higher by the end of the year, says Zoopla.

Decisions

It believes the government’s proposals in the Renters’ Rights Bill are already factored into many landlord decisions on whether to exit or remain in the market. However, any new policy or tax changes that result in a reduction in supply will push rents higher, hitting low income renters hardest, says executive director Richard Donnell.

The slowdown in UK rental growth is being driven by much lower figures in London (2.5%) and in other major UK cities (5.8%). However, rents have continued to rise quickly in Wolverhampton (12%), Oldham (11%), Darlington (10%) and Walsall (10%), all areas next to large cities with or well connected for transport.

Investment

Director of Benham and Reeves, Marc von Grundherr, agrees that the Renters’ Rights Bill and expected tax changes are likely to deter landlord investment. He adds: “The level of quality rental accommodation is only likely to reduce further and whilst the landlord exodus may be somewhat exaggerated, we’re already in need of more homes at present and so any further reductions in stock will only cause the rental crisis to worsen.”

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