UK Rental Market Forecast to Continue Booming Through 2024 and 2025

The UK rental market is poised for significant growth in the coming year, driven by a confluence of economic, demographic, and societal factors.

As home ownership remains out of reach for many, and demand for let properties increases, rental prices are expected to rise across the country. Here’s a detailed look at the expected trends, the most impacted regions, and the implications for renters.

According to recent market analyses, rental prices in the UK are projected to increase by an average of 4-6% over the next year. This surge is attributed to a shortage of rental properties, increased demand from a growing population, and shifts in housing preferences. The pandemic has also influenced housing trends, with more people seeking flexible living arrangements and the ability to relocate more easily.

A report by Zoopla, a leading property portal, highlights that rental growth has already been strong in 2023, and this trend is set to continue. In some areas, the increase could be even more pronounced, especially in major cities and regions experiencing economic growth.

While the rental market is expected to grow nationwide, certain areas will see more substantial impacts:

1. London: The capital is always a hotspot for rental activity. Despite a slight dip during the pandemic, the rental market in London is bouncing back with vigor. Inner London areas, in particular, are forecast to see rental increases of up to 8% as international students and professionals return. With prices rising so steeply, also has the HMO property market as renters look to reduce costs.
2. South East England: Counties like Surrey, Kent, and Berkshire are expected to see significant rental price hikes. Proximity to London, coupled with thriving local economies, makes these areas particularly attractive.
3. West Midlands: Birmingham and its surrounding areas are also set to experience a rental boom. With ongoing regeneration projects and a growing tech sector, the West Midlands is becoming a desirable location for young professionals. With many blocks of flats being built, the apartment style living is becoming a huge scene in this area of the country.
4. North West England: Manchester and Liverpool continue to attract renters due to their vibrant city life and relatively lower cost of living compared to the South. Rental prices here could increase by 5-7%.
5. Scotland: Cities like Edinburgh and Glasgow are seeing strong demand for rental properties, driven by their robust job markets and vibrant cultural scenes. These cities are likely to witness rental increases of around 6%.

The rising rental prices will have significant implications for renters across the UK:

1. Affordability Issues: As rental costs climb, affordability will become a pressing concern for many tenants. Young professionals, students, and low-income families will be particularly affected. Increased rent could lead to higher living costs, putting additional financial strain on households.
2. Demand for Smaller Properties: With higher rents, there might be a shift in demand towards smaller, more affordable properties. Studios and one-bedroom apartments could become increasingly popular as renters seek to manage costs.
3. Location Flexibility: The ability to work remotely has given many renters the flexibility to move away from expensive urban centers. This trend might continue, with more people opting for suburban or rural areas where rents are lower.
4. Long-Term Rentals: As buying a home becomes more challenging, many individuals and families might choose to rent for longer periods. This could lead to increased stability in the rental market but also create a greater need for long-term rental security and tenant rights.
5. Increased Competition: With a growing number of people looking to rent, competition for desirable properties is likely to intensify. This could result in faster decision-making processes and possibly higher upfront costs, such as deposits and agency fees.

The UK rental market is on the cusp of a significant boom, driven by a variety of factors that are set to push rental prices higher over the next year.

While this presents opportunities for landlords and investors, it also poses challenges for renters who will need to navigate the rising costs and competitive landscape. Policymakers and industry stakeholders will need to work together to ensure that the rental market remains accessible and fair for all.