In a forecast that spells a potentially challenging road ahead for landlords, Rightmove, a prominent property platform, anticipates a delicate balancing act in setting rental prices over the next year.
The platform’s analysis reveals a notable trend: an upturn in the number of rental properties experiencing a dip in asking rents during marketing. Statistics indicate a rise from 16% to 23% in properties with reduced advertised rents compared to the same period last year.
Of particular concern is the growing strain on rental affordability. Rightmove highlights that a typical single renter, with an average income, is now allocating 51% of their earnings towards a rental home. This figure has increased from 49% a year ago and 46% in 2019.
Attributing this strain to inflated rental prices and an apparent ceiling on affordability, Rightmove emphasizes the impending challenge for landlords. Christian Balshen, a Rightmove lettings expert, underscored the shifting landscape: “Landlords are facing the dual imperative of meeting mortgage obligations while securing tenants capable of sustaining longer-term relationships and coping with local rent rates.”
Balshen explained, “Escalating mortgage rates have rippled into the rental market, prompting some landlords to incrementally pass these costs on to tenants. Yet, many tenants have a limit to what they can feasibly pay, leading an increasing number of landlords to adjust advertised rents, signalling a reaching of this limit.”
Looking forward, Rightmove advocates for landlords to collaborate closely with local letting agents versed in regional dynamics to navigate these challenges effectively. The platform’s analysis indicates that average advertised rents concluded 2023 at a 10% increase across the UK, excluding London, and a 6% surge in the capital.
As the forecast unfolds, Rightmove anticipates a continued upward trajectory in advertised rents by 5% outside London and 3% within the capital by the end of 2024, underscoring the ongoing pressure on rental pricing in the foreseeable future.