Competitive bids wane as market starts stabilising

Average asking rents for new tenants outside London have risen to another new record of £1,172 per calendar month says Rightmove.

This means average rents for newly listed properties rose by 9.7 per cent in 2022 - the second largest annual rise on record.

But the portal warns there are signs that the pace of rent growth is beginning to ease, as the final quarter’s rise of 0.9 per cent is the smallest quarterly increase for two years.

In London, average asking rents accelerated in growth in the final months of the year, rising by 5.8 per cent compared with the previous quarter, taking average asking rents for new tenants to a new record of £2,480 pcm. In Inner London, which includes some of the capital’s most expensive areas, average asking rents surpassed £3,000 pcm for the first time.

The number of available properties to rent in December was 13 per cent higher than the same period the previous year. New properties coming up for rent were also up five per cent in December compared with December 2021, while the number of tenants looking for a property to rent is seven per cent higher over the same period.

Competition between tenants for the properties available has dropped by six per cent compared with this time last year, and by a third compared with the peak in September, when the gap between supply and demand was at a record high.

Wales (up 15 per cent) and the South West (up 13 per cent) have seen the biggest jumps in new properties to rent regionally, which has led to a slight drop in respective average asking rents of one per cent. This is a first quarterly drop in average asking rents for any region since the beginning of 2021.

Despite these positive signs the imbalance between supply and demand is still very high. The number of properties to rent is down by 38 per cent compared with pre-pandemic 2019, while the number of people enquiring about a property to rent is 53 per cent higher.

Owing to this ongoing imbalance between the number of people who are looking for a home to rent, and the number of properties to rent available, Rightmove predicts average asking rents for newly available properties will rise by a further five per cent in 2023. Though historically this would be a significant rise in annual asking rent growth, it would mark a slowing in the pace of growth from the previous two years.

Rightmove spokesperson Tim Bannister says: “Although the fierce competition among tenants to find a home is starting to ease, it is still double the level it was back in 2019. Letting agents are seeing extremely high volumes of tenant enquiries and dealing with tens of potential tenants for each available property.

“Landlords will need to balance any rent rises with what tenants can afford to pay in their local area, to continue to find tenants quickly and avoid any periods where their home is empty due to tenants not being able to meet the asking rent.

“There appears to be some more property choice for renters compared to the record low levels of last year which would slightly ease the fierce competition to secure a home. This is why we’re forecasting that the pace of annual growth will ease to around five per cenbt by the end of the year nationally, although this would still significantly exceed the average of two per cent that we saw during the five years before the pandemic.”