Zoopla Rental Market Report – September 2024

21 people competing for every rental property as supply remains a major problem for renters’, pushing rents higher

  • Number of homes for rent still 24% below pre-pandemic average compounded by stalled new investment by private landlords

  • Possible tax changes in Autumn Budget could result in further landlord sales

  • Rental demand has weakened but still 21 people competing for each rental property, more than twice the pre pandemic average

  • Rents posting double digit gains in affordable areas outside major cities e.g.  Kilmarnock and Kirkcaldy in Scotland and Wolverhampton, Oldham, Darlington and Walsall in England

  • Supply/demand imbalance to remain into 2025 with growing unaffordability the main brake on faster rental growth.

Zoopla, the UK’s leading property website has released its latest Rental Market Report1, revealing a continued mis-match between supply and demand. Rental growth for new lets currently stands at 5.4%, half the rate compared to a year ago but still higher than the growth in average earnings (5.1%). Average rents stand at £1,245 per month in July 2024, £63 per month higher than a year ago.

A lack of supply remains a major challenge for renters due to low levels of new investment by private landlords. The number of homes for rent is up by almost a fifth on last year off a low base, but the number of homes for rent is 24% below the pre-pandemic average.

Whilst rental demand has declined over the last year as one-off pandemic factors fade, mortgage rates fall and tighter visa rules reduce migration for study and work, there are still 21 people competing for every rental property, more than double pre-pandemic levels. This explains the continued impetus for rental inflation.

Risk of budget tax changes compounding supply problems

A lack of new investment in private rented homes has created a scarcity of homes for rent, compounding the strong growth in rents over the last 3 years (+30%). Increasing  the supply of homes for rent is essential to help to alleviate the scale of rent rises in the face of sustained demand.

Our data shows a steady flow of landlords selling homes since 2016. Over 1 in 10 homes for sale on Zoopla (12.5% in July) were formerly rented. Higher mortgage rates have acted as an additional catalyst for landlord sales over the last two years on top of tax and regulatory changes dating back to 2016.

The Government’s new proposals for rental reforms as set out in the Renters Rights Bill, are already factored into many landlord decisions on whether to exit or remain in the market. However, speculation over tax changes in the autumn budget that might impact landlords, may well result in an increase in sales of rented homes, further eroding supply for renters and pushing rents higher. The lead time to complete a property sale runs to over 20 weeks which means it is too late to start now in the hope of completing before the Budget. However, a delay in any changes to taxation that impact landlords could result in more landlord sales in the short term.

Rents rise the most in affordable areas adjacent to large cities

The slowdown in UK rental growth is being driven by much lower growth in London (2.5%) and a slowdown in other major UK cities (5.8%). Rents are rising at an above average level across much of the rest of the UK, covering smaller cities and towns where rental costs are lower and offer better value for money. Some of the fastest rent rises are in affordable areas adjacent to these larger cities with six postal areas registering 10% or above annual rental growth.

Table 1: Areas in the UK experiencing 10 per cent plus rent inflation 

Country

Postal Area

Annual growth

Average rent pcm

Closest City

Annual growth

Average rent pcm

Scotland

Kilmarnock (KA)

13 %

£608

Glasgow

5.3 %

£965

Kirkcaldy (KY)

12 %

£708

Edinburgh

7.3 %

£1,323

England

Wolverhampton (WV)

12 %

£871

Birmingham

5.7 %

£958

Oldham (OL)

11 %

£851

Manchester

6.3 %

£1,088

Darlington (DL)

10 %

£597

Middlesbrough

7.8 %

£635

Walsall (WS)

10 %

£873

Birmingham

5.7 %

£958

Supply/demand imbalance to remain into 2025

The demand for rented housing has slowed as one off pandemic factors start to fade and lower mortgage rates help some renters buy their first home. Changes to visa rules appear likely to reduce migration for study and work. Despite a softening labour market, rental demand is likely to run at above average levels for the remainder of 2024, with rents expected to be  3 to 4% higher by the end of 2024.

The unaffordability of homeownership will continue to support demand for renting, especially across southern England where a significant number of workers can not afford to buy. A lack of meaningful growth in the supply of affordable housing means the private rented sector will continue to meet demand from those on lower incomes, further adding to overall demand.

Commenting on the latest report, Richard Donnell, Executive Director at Zoopla said: “The slowdown in rental inflation is being drawn out by a lack of homes for rent and continued strong demand, driven by the unaffordability of home ownership. Rental inflation is slowing in some major cities where rents are high but they are still increasing quickly in more affordable areas.

Any new policy or tax changes that result in a reduction in supply will simply push rents higher hitting low incomes renters hardest. It is essential policy makers focus on growing the stock of homes for rent as the primary route to slowing rental inflation and improving choice for renters. As things stand the growing unaffordability of renting is the only route to slower increases in rents.”

Director of Benham and Reeves, Marc von Grundherr, commented: “There remains an incredibly high demand for good rental accommodation and we simply don’t have the supply reaching the market to satisfy this demand.

“As a result, properties are being let at an extremely quick pace and this supply and demand imbalance is driving rental values ever higher.

“Unfortunately, this is a problem that looks set to persist, with the government introducing the Right to Rent bill this week, with tax changes also expected in the Autumn Statement, both of which are likely to deter landlord investment.

“In doing so, the level of quality rental accommodation is only likely to reduce further and whilst the landlord exodus may be somewhat exaggerated, we’re already in need of more homes at present and so any further reductions in stock will only cause the rental crisis to worsen.”

EAN Breaking News

Breaking News from the team at Estate Agent Networking. Have a new story to share with us? Then please get in contact today! When and where we can we will refer to third party websites with a 'live link back' where news was released first.

You May Also Enjoy

Estate Agent Talk

Half of Brits would retrofit their property to make it more appealing to future buyers

The government is funding £13.2 billion in retrofitting properties Two-thirds (61%) of homeowners state that upfront cost is the biggest barrier to retrofitting Younger homeowners are more open to green improvements in their homes Over half of Brits think retrofitting would make their property more appealing to future buyers Over half  (59%) of homeowners would…
Read More
Breaking News

Buyers hit pause: Housing market records first annual fall in new sales in two years as more buyers adopt ‘wait and see’ strategy

House price growth has slowed over 2025, currently standing at 1.3 per cent which is broadly in line with the level a year ago Uncertainty over the November Budget has driven a growing ‘wait and see’ attitude amongst home buyers, leading to the first annual fall in new sales agreed in two years The usual…
Read More
Rightmove logo
Breaking News

Rents hit new record as pace of new rental homes coming onto the market slows

The average advertised rent of homes outside of London rises again in Q3 2025 to a new record of £1,385 per calendar month (pcm). Average rents outside of London are now 3.1% higher than a year ago Average advertised rents in London also reach a new record of £2,736, however rents in the capital are…
Read More
Estate Agent Talk

The ‘Rentvesting’ Strategy: Owning a Home Where You Can’t Afford to Live

Oh, the ever-evolving property market. Keeps us wondering: how will I keep my head above water? And this is how a war-like property strategist is born. One of these savvy strategies is called: rentvesting. This is the art of renting where you want to live and buying where it fits your wallet.  Getting your foot…
Read More
Rightmove logo
Breaking News

Momentum gathers for retail investment as Bank Rate cut again

Demand to invest in retail property was up by 30% in Q3 2025 compared to the same period in 2024 The office market is also continuing to recover, with investment demand up by 31% over the same period, and leasing demand up by 7% Overall demand to invest in commercial property was up by 11%…
Read More
Breaking News

Surge in first-time buyers’ preference for cheaper homes subsides as market adjusts to April’s stamp duty changes

Proportion of first-time buyers purchasing properties under £300k decreased to 64.3 per cent in September, following a peak of 72.0 per cent in May after changes to stamp duty thresholds Detached and semi-detached homes now make up nearly two-thirds of non-first-time buyer purchases, as ‘second-steppers’ look for long-term security Spending on mortgage and rental payments…
Read More