Explore the Q4 2023 outlook for the rental market! Discover anticipated rental increases, supply and demand dynamics, and expert insights. Plus, learn about PH Estate Agents’ services in Cleveland and North Yorkshire.

While higher mortgage rates and the cost of living have temporarily deterred some first time buyers from entering the property market, the number of tenants chasing rental properties continues to grow.

Annual UK rental growth is currently 10.5%, according to Zoopla’s most recent Rental Market Report, published in September. This is down from 12.1% a year ago but has been rising in double digits for 18 months. But what’s in store for the rest of the year?

Anticipated Rental Increase

Mortgages – including Buy To Let mortgages – are gradually coming down now but they increased significantly after the Truss/Kwarteng mini budget last year. And landlords inevitably looked to cover rising costs. Across the UK, rents are expected to rise by around 4% in 2023 and 2024, according to Statista  – with increases fuelled by rising demand and higher maintenance costs caused by inflation.

Research from Zoopla shows that average rents have gone up by £110 a month over the last 12 months – an annual increase of £1,320. Rents for new lets have risen even more, rising by an average of £2772 a year over the last three years.

Across the UK, on average, renters are paying 28.4% of their gross earnings on rent. This is the highest rate in 10 years.

In Scotland, the country is registering annual rental inflation of 12.7% – the highest in the UK – with rents for new lets 15.6% higher in Edinburgh and Dundee and up 13.7% in Glasgow. Many commentators say this is due, at least in part, to new rent controls introduced in September 2022.

Stock Shortages

Prices will also continue to be impacted by the mismatch of supply and demand for rental properties. According to Zoopla’s Rental Market Report, in December 2022 the supply of rental properties was 38% below the five-year average even though rental enquiries themselves were at a 46% high above the five-year average.

In its September report, demand is now 51% above the five-year average against a stock of properties to rent that is down by 30% on the five-year average but up by 20% on 2022. A fall in home building levels, as well as reduced investment by private landlords thanks to higher borrowing costs, will continue to influence the supply/demand challenge for the rest of this year and into next.

Looking ahead

The remaining months of 2023 are likely to see little change in these patterns, with Zoopla predicting rental growth to end the year at more than 9%. In theory, the impact of affordability should reduce rental growth – but with a market that’s also pricing people out of the buying market this may be at a slower rate. UK rental growth of 5-6% is currently expected in 2024, with a more rapid slowing of retail inflation in inner London likely to be one of the biggest influencers on the overall UK growth rate.

At PH Estate Agents, we specialise in properties across Cleveland and North Yorkshire, our heritage comes from traditional estate agency values, based on trust and exceptional customer service.

Residential & Commercial Lettings: We offer a full range of letting services from a tenant find service to fully managed lets, and our team of experienced lettings managers offer guidance throughout the lettings process.

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