Agent says rents set to fall as economy returns to near-normal

A buying agent claims that rents could finally be tailing off despite some indices showing rises still taking place.

According to Rightmove, the typical advertised private rent outside London for new properties coming on to the market rose to a record £1,280 a calendar month in the final quarter of 2023, and the average advertised rent outside London was 9.2 per cent higher than a year ago.

But Jonathan Rolande of the House Buy Fast agency says there are now early signs the rises are now leveling off.

“As expected, the rise in rents has slowed but it had to at some point as the reality of affordability sets in. Reasonably high wage growth in cities and a reduction in the sector's growth created the ingredients for this fast climb. 

“Tenants who might otherwise have bought their own home didn’t – either because they could not afford to in the new high-interest rate world, or were waiting for prices to fall. This only served to drive up rents even more. 

“As the sales market gradually returns to normal many of those tenants who are able to, will now buy. More landlords will enter the sector, hoping to have bought at the bottom of the market. 

“Fewer tenants and more homes available will steady rents and in the latter part of the year, we may even see rents decline slightly as landlords try to give incentives to reliable tenants. 

“If interest rates fall as widely predicted, this scenario will gain pace.

And he adds: “The unknowable factor, however, is the prospect of an election and the likelihood of tax cuts or buying incentives that could change the landscape. A different government would also create some uncertainty. 

“Many landlords fear Labour would impose punitive regulation and even rent caps – something the leadership deny but the fear alone could lead to a sell-off. And in an election year, an already unpredictable market gets even more difficult to forecast.”

This article is taken from Letting Agent Today