A new government, budgets, rental rises slowing, rental supply increasing….what to do?

In a year that’s seen a new government, interest rates fluctuate and civil unrest across the globe, what does this mean for the rental market? Is it a good time to invest? Should you sell your properties and quit while you’re ahead? Or is it time to buy up more assets and make hay while the sun shines?

It’s difficult to know, which is why we’ve collated data and opinion about the rental market in 2024 and provide some insight into the year that was.

Statistics from 2024

Let’s start with the market and how that’s faired over the last eleven months. For this, let’s review the data. Zoopla’s rental market report indicates that there has been a cooling of the rental market in 2024, which is important as it marks the first time this has happened in three years. And as you would expect, this means that rent rises have also slowed – down to 5.6% in 2024 from a high of 12% in 2022 across the country, whilst London still holds strong with rent inflations, according to the Office of National Statistics, citing a 9.8% increase in rent inflations for 2024. Renting in London is still expensive and is 20% more expensive in 2024 than it was two years ago.

Demand remains high

 Although increases in rent rises have slowed, the demand for good, rentable accommodation remains high. 17 prospective tenants completing for one rental property is a figure bounded around, and given the scarcity of homes, it is probably true. The National Residential Landlords Association, indicates that landlords who let property in the South East experience the highest levels of demand, with 84% saying it was strong in Q3 2024. 

Conversely, rents continue to rise when compared with previous years. Zoopla also report that there are still 25% less homes available to rent than before the pandemic.

A new Government

The Labour Party, and the Conservatives before them, have both included housing in their manifestos. Kier Starmer’s Cabinet have actively addressed the shortage of affordable housing, and have proposed changes to planning laws in an effort to address the need for this. However, at the time of writing we’ve seen very little change and housebuilding is falling far behind the government’s 300,000 a year target. All of this can only mean that the need for rental properties will remain high.

Stay or Go?

Despite demand outstripping supply, there has been an increase in landlords selling over the last few years, echoed in the Zoopla report which cites that 12.5% of all homes that came to the selling market in July 2024 had been previously rented. The reason for this could, in some part, by down to higher taxes. Certainly, some of the landlords we speak to are concerned about stricter green rules and suggested rises in Capital Gains Tax (CGT). Higher interest rates and increases in maintenance and repair costs also play a part. 

Stick or Twist

The rental market road has certainly been bumpy in 2024. Rent rises have slowed, demand has remained, and more landlords have decided to sell their assets and move portfolios. Experts suggest that 2025 will tell a similar story.

So what to do when you think about staying put, or cashing in your chips. It’s a subjective one, and one we can’t answer for you, but if you do decide to capitalise on the demand, and are looking to expand your portfolio, let us know as we would be delighted to help.

Email us to start the conversation.

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