Average advertised rents have reached another new record of £1,316 per calendar month outside of London, 7% higher than last year, revealed the latest Rightmove data.
Meanwhile, average London rents are now £2,652 per calendar month.
While the pace of rent growth has slowed down compared to the 12% peak registered two years ago, it is still much higher than the 2% yearly increase seen before the pandemic.
Based on this data, Rightmove estimates that approximately 120,000 more rental properties are needed onto the market to achieve a 2% rent growth per year level.
According to the property website, the supply/demand imbalance is one of the key drivers behind the rapid increase in advertised rents since the pandemic.
Regionally, Scotland is currently the hardest hit by supply and demand imbalances, while London is the least affected.
There has been a 15% decrease in the number of tenants looking to move into London, and an increase of 16% in the number of available properties to rent in the capital.
This has resulted in the biggest overall improvement in supply and demand compared to this time last year, with rental growth slowing down from its peak of 18% in 2022 to 4% this year.
Based on the results, Rightmove is calling on the next government to streamline the planning process, accelerate housebuilding, and provide incentives for landlords to invest in more homes for tenants, to improve the supply and demand imbalance in the rental market and ensure that growth in rental prices is sustainable.
Tim Bannister, Rightmove’s property expert, commented: “We’ve been talking about the imbalance between supply and demand in the rental market for a long time now, so it’s easy to forget that there was a time before the pandemic where rental price growth was more stable.
“Double-digit yearly rent increases were not sustainable, and, while there has been some improvement in the ratio between supply and demand, price growth at +7% suggest we are still out of balance — in fact, our analysis shows we would need 120,000 more properties on the rental market to achieve a more sustainable level of rent growth of around 2% per year.
“The next government should be prioritising an improvement to the planning process, an acceleration of housebuilding, and encouraging more supply into the rental market.”
In response to Rightmove's latest report, Nathan Emerson, CEO at Propertymark, commented: “Propertymark has long argued that the PRS needs more houses to stabilise rental prices, but there is a myriad of other factors that can contribute towards making the market more attractive for both investors and tenants.
“With a general election coming this week, Propertymark would like to see the next government reform the tax system so that more investors can be persuaded to invest in the private rental sector and lower rents for tenants in the long-term.
“While we support a greater supply of houses, there has to be a sensible deliverable programme mindful of protecting the green belt wherever possible.
“It would also be wise for them to avoid rent controls which have had a devastating effect on the PRS in Scotland.”
