Rental market trends: What landlords should expect in 2024
February 10th 2024
The housing market isn’t a static thing – it changes rapidly from month-to-month, and can look totally different from one year to the next. If you’re a landlord, keeping an eye on the market changes and trends is vital to make sure you’re ahead of the curve and don’t face any unexpected surprises.
With January behind us and the new year fully in swing, we’ve put together a summary of the 2023 rental market and a look into what 2024 may hold for landlords. From changing tenant demand to upcoming legislation, these are all the things you should look out for in 2024.
What was the UK rental market like in 2023?
2023 was another year of high demand and continued growth in the rental market. Landlords leaving the market decreased the stock levels and high mortgage rates made home ownership less attainable for first time buyers. This created the perfect storm for a competitive rental market that drove up prices. At the end of 2023 the average advertised rent outside London was around £1,280 per calendar month, while inside London hit of a new record of £2,631. This marked a 9.2% annual increase and the 15th consecutive quarter of growth.
What will the rental property market look like in 2024?
Despite the record growth of the past few years, the rental market is looking to slow down in 2024. Demand has been dropping since the second half of 2023, and asking rents are being reduced at an average of 7% outside of London and 10% inside of it. This is due to a number of factors, from the stagnating economy making renters tighten their spending, to the decrease in mortgage interest rates making buying a more realistic prospect.
However, rents are still predicted to rise 5% in 2024, particularly in regional markets. UK rental demand is also still over 32% above the five-year average, which is likely to hold or even increase given the continued lack of rental supply.
What should landlords look out for in 2024?
Renters reform bill
The Renters Reform Bill, while delayed, remains on the horizons and is something landlords should keep an eye on. The Bill is currently in the report stage and there’s yet to be an announcement regarding its 3rd reading, which would push it through the House of Commons and into the House of Lords.
The government announced last year that the abolition of Section 21 no-fault evictions, a major piece of the legislation, was to be delayed until ‘sufficient progress has been made to improve the courts’. However, should the bill pass through without the Section 21 abolishment, there are still a lot of changes landlords should look out for. These include the rights for tenants to own pets, the introduction of the new Private Rented Sector Ombudsman, and a rented property portal.
Leasehold Reform Bill
Introduced in the King’s Speech in November 2023, the Leasehold and Freehold Bill will implement a major overhaul of leaseholds and freeholds. Its main aim is to make it cheaper and easier for leaseholders to extend their lease and buy their freehold, as well as increasing the standard lease extension term to 990 years, and the regulation of ground rents.
Over a third of privately rented properties are leaseholds, and any changes to ground rent charges will impact landlords and should in theory decrease costs. The bill has passed its 2nd reading and is currently in its review stage, so look out for this to go through the House of Commons sometime this year.
UK general election
While we’re uncertain on the precise month, there is guaranteed to be a general election before the end of this year. The rental market is a hot political topic for both major parties, so landlords should pay close attention to the outcome of the general election.
Our property management team have extensive knowledge and expertise in the rental market and upcoming legislation. For more information, contact them today.