Rental growth continued to cool in February, says the latest market snapshot from lettings agency Hamptons.
Last month, the average rent on a newly let home in Great Britain rose 7.1% year-on-year, down from 8.3% in January and a peak of 12.0% in August 2023.
Even so, rental growth is still running faster than inflation and increases mean the average tenant moving into a new property would pay an extra £87 pcm or £1,044 a year more in rent than if they moved last year.
These affordability pressures combined with more homes on the rental market have slowed rental growth. There were 30% more homes available to rent across Great Britain last month compared to the same time last year when stock levels reached rock bottom.
However, this predominantly reflects the fact that homes are taking a little longer to let, rather than a rise in landlord purchases. Compared to February 2019, there are still 41% fewer homes to rent.
Scotland recorded the biggest rent rises last month. The average cost of a newly let property in Scotland, which isn’t subject to rent caps, rose 11.0% year-on-year. Scotland is one of only two areas (including the East of England) where rents are still rising at a double-digit pace.
This suggests landlords are using vacant procession to bring their rents up to market rate.
Aneisha Beveridge, Head of Research at Hamptons, says: “The pace of rental growth continued to cool in February. But rents are still some way off falling annually and tenants continue to feel the squeeze.
“Lower mortgage rates have meant landlords needing to refinance in 2024 are seeing a smaller adjustment in their mortgage costs than those who remortgaged in 2023. This is slowly helping to balance mortgaged investor’s books.”
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