The UK rental market continues to experience unprecedented demand, with landlords facing a surge of prospective tenants vying for each available property. Tenant demand remains high across much of the country, while the supply of rental homes continues to fall short, despite a nearly 20% increase in the number of homes available to let compared to last year, according to the latest Zoopla Rental Report.
This ongoing mismatch means landlords are able to let their properties swiftly, often at or above the asking rent, as they have the luxury of choosing from a wide pool of tenants. The report reveals an average of 21 tenants competing for every rental property, a number that has more than doubled since pre-pandemic levels.
The most sought-after properties are those offering higher energy efficiency, as rising energy costs push less efficient homes down the list of tenant priorities. Real estate agents are now urging landlords to upgrade their rental stock to meet this growing demand for energy-efficient homes.
Marc von Grundherr, director of London-based estate agency Benham and Reeves, highlighted the supply-demand imbalance, stating: “There remains an incredibly high demand for good rental accommodation, and we simply don’t have enough supply reaching the market to satisfy this demand. As a result, properties are being let at an extremely quick pace, and this imbalance is driving rental values ever higher.”
Soaring Rents Driven by Demand
Zoopla’s report indicates that average rents across the UK hit £1,245 per month in July, marking an increase of £63 compared to the previous year. This 5.4% rise in rental prices reflects strong growth in new lets, although the rate of increase has slowed somewhat, particularly in London, where rents rose by just 2.5% over the past year.
Outside the capital, however, rents continue to climb at a faster pace, particularly in smaller cities and towns. Northern regions such as Oldham and Darlington have seen rental growth of 11% and 10%, respectively, as affordability in these areas attracts both renters and property investors.
Outlook for Landlords: Strong Demand to Persist
With no significant market or policy changes on the horizon to increase rental supply, experts predict that landlords will continue to benefit from high tenant demand. Zoopla’s analysis suggests that the current trend of supply shortages and strong demand will persist into 2025, with rents expected to rise by 3-4% by the end of this year.
Richard Donnell, Executive Director at Zoopla, emphasized the importance of addressing the supply issue: “The slowdown in rental inflation is being prolonged by a lack of homes for rent and continued strong demand. Any new policy or tax changes that reduce supply will only push rents higher, disproportionately impacting low-income renters. Policymakers need to focus on increasing the stock of homes for rent to slow rental inflation and improve options for tenants.”
Calls for Support to Balance the Market
Industry figures are calling for more support to address the challenges facing both landlords and tenants. Nathan Emerson, CEO of industry body Propertymark, stressed the need for long-term solutions to stabilize the market.
“The rental market has been grappling with a supply shortage for far too long,” Emerson said. “The escalating demand, coupled with rising costs for landlords, is creating significant pressure on the sector. Without a balanced approach to new legislation, such as the proposed Renters’ Rights Bill, we risk exacerbating the supply crisis and making it even harder for renters to secure suitable housing.”
As the UK rental market tightens further, both investors and policymakers are being urged to take action to ensure the sector remains sustainable for landlords and affordable for tenants.