The latest rental market analysis from Zoopla has revealed that rental growth in June slowed to its lowest level for 33 months.
Demand for rental homes fell by 39% over the year, while rents for new lets rose by 5.7% over the 12 months to June 2024.
The average UK rent was £1,232 per month, or an increase of £66 per month compared to the same time in 2023.
Rents fell across several major cities over the first half of 2024, including Nottingham (-0.6%), London (-0.4%), Brighton (-0.2%) and Glasgow (-0.2%).
Zoopla’s rental index tracked rental growth in 64 cities, and in 75% the rate of rental growth was lower.
Rents continued to rise at an above-average rate in more affordable markets adjacent to large cities and where renting remains better value for money.
For example, Rochdale (+6.9%), Doncaster (+5%), Southend (+5%), Sunderland (+4.4%) and Telford (4.3%) all recorded rental growth of over 4% in the first half of the year.
There is a similar pattern of rental growth across London boroughs with rents falling in inner areas led by Tower Hamlets, Newham and Greenwich.
More than one-third of London boroughs – 12 of 33 – recorded rents falling in H1 2024 and well below the levels recorded a year before.
Rent levels were lower in Outer London, which explains above average rates of rental growth in the first half of the year.
While agents were found to have 17% more homes for rent than a year ago, the average letting agent still had a third fewer homes to rent compared to the pre-pandemic average in 2017-19.
Lower mortgage rates have made it a little easier for first-time buyers to buy homes and leave renting, while more new homes are being sold to corporate landlords for renting.
A small but not insignificant number of private landlords are continuing to sell rented homes in the face of a changing business environment and higher mortgage rates.
Richard Donnell, executive director at Zoopla, said: “Renters will welcome the fact that rents for new lets are rising at their slowest pace for 3 years.
“Rents have risen so fast they have over-shot in some cities and we are seeing modest falls in rents in some cities as rents adjust to weaker demand and modest increases in the availability of homes for rent.
“Rents continue to rise more quickly in more affordable areas adjacent to large cities as renters seek better value for money.
“Rents are on track to be 3-4% higher over 2024 which is more than half the level recorded last year and below earnings growth providing some modest relief for the UK’s private renters.”