Average advertised rents have hit a record high as landlords prepare for a summer boom in lettings demand.
The summer months are typically busy times for the buy-to-let market as students relocate to university towns and families seek a new place to live before the new school year.
This is reflected in new figures from property website Rightmove that showed advertised rents hit a record £1,314 during the second quarter of 2024.
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The figure was up 6.8% annually and rose 1.8% on a quarterly basis.
London rents have also risen to a new record of £2,661, according to Rightmove, 4% higher than last year.
The number of enquiries each property is receiving from would-be tenants is now 17 which, while down from 26 in 2023, is more than double the eight at this time in 2019, Rightmove said.
“With 17 enquiries for every available rental property, the market remains out of balance and difficult for tenants, says Tim Bannister, director of property science for Rightmove.
“We need landlord investment to increase stock and help achieve a healthier supply and demand balance in the market.”
The data follows research by Foxtons last week which highlighted a busier period as the market enters peak lettings season.
Where are rents growing the fastest?
There were warnings earlier this year that rental growth may slow as tenants hit an affordability ceiling due to high inflation.
But high mortgage rates have also restricted many people's ability to buy a property, keeping demand for renting high.
The lack of rental supply is also benefiting landlords, helping to keep rent and yields relatively high.
Advertised rents were up by the most in the North East of England during the second quarter, rising 10.3% annually, followed by a 9.3% rise in the West Midlands.
The highest quarterly increase was in the North East as well, up 2.8%.
Landlords are enjoying the highest yields in Scotland, at 8.5%, followed by an 8.3% rise in the North East of England.
Despite most rental price hotspots sitting in the North of the country, the highest annual change in rent was in Walton-on-Thames, Surrey during the second quarter, up 30.4% to £1,960 per month.
The second largest rise was in Blackburn, Lancashire, where rents rose 18.1% annually to £711.
| Region | Average advertised monthly rent | Annual increase | Average yield |
|---|---|---|---|
| Scotland | £1,078 | 7.9% | 8.5% |
| North East | £906 | 10.3% | 8.3% |
| North West | £1,146 | 7.8% | 7% |
| East Midlands | £1,150 | 6.7% | 6.3% |
| West Midlands | £1,183 | 9.3% | 6.4% |
| East England | £1,597 | 7% | 6% |
| Wales | £1,059 | 4.1% | 6.8% |
| London | £2,661 | 3.7% | 5.5% |
| South East | £1,837 | 5.2% | 5.9% |
| South West | £1,418 | 5.8% | 6% |
Is buy-to-let still profitable?
Landlords have faced a tough few years, with restrictions on tax relief and extra stamp duty charges for buy-to-let purchases.
This has hit landlord profits and reduced the attraction of property investing.
Landlords may also be worried about plans by the government to scrap section 21 eviction notices, making it harder to remove tenants.
Tom Bill, head of UK residential research at Knight Frank, warns that this could push rents higher.
“The extent to which rents have risen in recent years underlines the dangers of disincentivising landlords,” he says.
“A growing burden of red tape and taxes means many have sold up and falling supply has increased upwards pressure on rents. Any new legislation designed to protect the rights of tenants must therefore be careful that it doesn’t come with a high price tag.”
Data from estate agency brand Hamptons suggests that rather than leaving the sector, landlords aren’t adding to their portfolios.
Its research suggests landlords purchased 10% of all homes sold across Great Britain during the first half of this year, the lowest share since 2010.
“Rather than a mass landlord sell-off, the lack of homes available to rent has been caused by fewer investors entering the market,” says Aneisha Beveridge, head of research at Hamptons.
“Tax and regulatory changes introduced since 2016 have been the main culprit, but these disincentives to invest have been compounded more recently by higher interest rates and political uncertainty around the threat of more rental reform."
Rightmove data shows that despite overall rental supply slowly improving from last year, rising 14%, the number of rental properties available is still 20% below pre-pandemic levels.
The property website suggests around 120,000 more rental properties are needed to bring rental price growth back towards more normal pre-pandemic levels but support is needed for landlords.
“There is an opportunity to encourage landlords to continue to invest in good quality homes, for example through tax changes, incentives to help with energy-efficient upgrades or a general sentiment change in government towards working alongside and with landlords,” adds Bannister.
“Landlords have previously told us that the government’s perception of landlords is one of their main concerns about the sector. Support for both tenants and landlords will be key to achieving long-term stability in the rental market.”
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