Rightmove, a leading property platform in the UK, has recently released predictions indicating that landlords will face significant challenges in setting appropriate rent prices over the next year. This comes as the number of rental properties experiencing a decrease in asking rents has risen noticeably.

Recent Trends in Rental Market

In the latter part of 2023, there was a marked increase in the number of rental properties with reduced asking rents. Statistics reveal that 23% of properties had their rent lowered during marketing, a noticeable jump from 16% during the same period last year. This shift implies a changing dynamic in the rental market.

Renters’ Affordability Strain

An alarming trend highlighted by Rightmove is the increasing burden of rent on average earners. A typical renter now spends 51% of their salary on rent, up from 49% last year and significantly higher than the 46% observed in 2019. This escalation puts considerable strain on renters’ budgets, pushing many to their financial limits.

The Landlord’s Dilemma

Given the stretched affordability for renters and the increasing need for rent reductions, landlords are in a tight spot. They must balance their mortgage commitments with the need to find and retain reliable tenants who can afford the ongoing rent. This balance is crucial for developing long-term, sustainable rental relationships.

Christian Balshen, a lettings expert at Rightmove, emphasizes the importance of finding a good tenant while managing the realities of mortgage payments. He notes that the rise in mortgage rates has indirectly impacted renters, with landlords having to pass on some of these increased costs – “Landlords have always prioritised finding a good, reliable tenant for their home alongside the reality of having to pay the mortgage each month. Higher mortgage rates have had a knock-on effect for renters this year, as landlords who have faced these higher rates and therefore higher monthly costs, have needed, in some cases, to pass these on to tenants to some extent.”

The Cap on Rent

Many tenants have a limit on what they can or are willing to spend on rent. The rising number of landlords who are lowering their advertised rents indicates that more renters are hitting this cap. It underscores the need for landlords to be more attuned to tenants’ financial limits.

Expert Advice for Landlords

Balshen advises landlords to collaborate closely with local letting agents who have a deep understanding of the local market dynamics. This partnership can help landlords find the right tenant at a sustainable rent level for their specific area.

Rent Predictions for 2024

Rightmove’s analysis concludes with a forecast for the coming year. Average advertised rents outside of London are expected to end up 10% higher than in 2023, while in London, the increase is predicted to be around 6%. For 2024, the projection is a 5% increase in rents outside of London and a 3% rise within the capital.