Tenants are showing signs of having hit an ‘affordability ceiling’ as they fork out record sums in rent, new research suggests.
This is where tenants are paying near the top level of what they can afford every month.
The average asking rent for new properties coming onto the market has reached a record £1,280 a month for those outside of the capital, according to Rightmove.
Another record: Average asking rents reach £1,280 a month outside London, says Rightmove
It is the 16th consecutive record in asking rent, with tenants appearing to show signs that the level of increases is unaffordable.
Rightmove said 23 per cent of rental properties listed on its website have had the advertised rent reduced, up from 16 per cent this time last year.
In more welcome news for tenants, the property website said the rise in rental growth is slowing.
In monetary terms, this quarter’s rise in rents equates to just £2 a month or 0.2 per cent, which is the smallest increase since at this time in 2019.
Rightmove went on to say that advertised rents outside of London are currently 9.2 per cent higher than last year.
While this not good news for those looking for a new rental property, it is worth noting that the annual percentage rise is the lowest it has been since 2021.
It is a similar picture in London as the rest of the country, with rents in the capital hitting a new record of £2,631.
They are £4 a month – or 0.2 per cent – higher than the previous quarter following London rental increases being slashed in half from 12 per cent last year to their current level of 6 per cent.
It is the first time that the annual growth in London rents has been in single digits since 2021.
Rightmove has revealed that typical asking rents in the capital have hit a new record of £2,631
Rightmove forecasts that the annual rate of rental growth will slow further in 2024.
It predicts that rents will be 5 per cent higher outside of London by the end of 2024 and 3 per cent in London.
It attributed much of this predicted slowdown to a readjustment of demand and supply in the rental market.
Lettings agents agreed there are signs that there is now more choice in the rental market.
Hayley Brinn, of The Total Letting Service, said: ‘Prices appear to be levelling out now as more choice becomes available, with tenants becoming more price sensitive, or just reaching the maximum of what they can afford to pay.
‘The prices of larger properties in particular are slowing down, unless the landlord accepts an offer.
‘Some tenants are reluctant to move unless they have no choice, due to the risk of being charged higher rents elsewhere, while other tenants who may want to move are stuck due to their current rent being below market value, and the price gap to move to a larger house being out of their reach.
‘Rent prices slowing this year would benefit these tenants wanting to move.’
And Nathan Emerson, of the trade body Propertymark, said: ‘It is encouraging to see a firm flow of new rental properties coming onto the market.’
Slower demand and greater supply is also reflected in Rightmove’s research. It claimed that the number of tenants sending enquiries about properties to letting agents is 13 per cent lower than the same period last year.
At the same time, the number of new rental properties coming onto the market is 7 per cent higher than last year.
It means that the average number of enquiries agents are receiving for every available rental property is currently 11.
This is nearly triple the four at this time in 2019.
Rightmove’s Tim Bannister said: ‘The trend of rent growth gradually slowing continues, with an improvement in the supply and demand of rental properties having a big contribution to that.
‘We can’t keep seeing double digit rent rises every year as tenant affordability simply cannot keep up, and 2024 is the year we think there will be a much smaller increase in advertised rents of 5 per cent outside of London, and 3 per cent in the capital.’
