Still, it outpaces inflation amid increased housing stock
Rental growth across Great Britain witnessed a slowdown in February, with the average rent for newly let properties increasing by 7.1% year-on-year, according to residential estate agent Hamptons.
This marks a decline from the 8.3% growth observed in January and a significant drop from the peak of 12% recorded in August 2023.
Despite this slowdown, rental growth continues to outpace inflation, leading to tenants facing an average increase of £87 per calendar month, or £1,044 annually, for new tenancies compared to the previous year.
Hamptons attributes the deceleration in rental growth to a combination of affordability challenges for tenants and an increase in the availability of rental properties.
The latest Hamptons Monthly Lettings Index also revealed a 30% rise in available rental homes last month compared to the same period in the previous year, when the availability of rental properties was at its lowest.
This increase in stock levels is primarily due to properties taking longer to let, rather than an increase in purchases by landlords. Nevertheless, the current stock of rental properties is still 41% lower than the levels observed in February 2019.
Scotland experienced the highest rental increases in the past month, with the average cost of newly let properties climbing by 11% year-on-year. Scotland, alongside the East of England, remains one of the few areas where rental growth continues at a double-digit rate.
“The pace of rental growth continued to cool in February,” commented Aneisha Beveridge (pictured), head of research at Hamptons. “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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