Prime rental growth steadies but landlords lose confidence – Savills

Prime rental growth steadies but landlords lose confidence – Savills


Todays other news

Prime rental growth steadied across the UK over the last three months of 2024, as the market continued to fall back in line with pre-pandemic seasonal trends. 

That’s the view from Savills, which says values remained flat on the quarter (-0.1%) across the prime London rental market, while annual growth stood at 1.5% – significantly lower than the average for the past two years. 

Outside of London, prime regional rental markets experienced their weakest quarter since before the pandemic (September 2018). Here values fell by -0.9% in Q4, taking annual growth to just 1.1%. 

“Prime rental markets continued to feel the impact of a rebalancing back towards seasonal trends and are now experiencing a more ‘normal’ rate of growth, following three years of strong increases,” says Jessica Tomlinson, research analyst at Savills.

“Modest growth in some areas was primarily underpinned by a lack of supply and strong demand. Looking forward, we expect increased regulation from the upcoming Renters Rights Bill and additional stamp duty for second homeowners to continue to limit supply, resulting in further upward pressure on rents in some locations.

“In prime central London, however, we anticipate some increased supply from former ‘non-doms’ properties entering the rental market. In the short term, this may temper the underlying effect of constrained supply.” 

Across all prime locations, smaller and lower-value prime rental stock has performed the strongest in 2024.  

In London, one-bedroom properties grew by 2.2% over the past year, while properties with four bedrooms or more grew by a lesser 1.1%. Across prime regions properties valued under £2,000 pcm saw the strongest annual growth at 2.9%.

“Smaller, needs-based properties have been the strongest performers over the past 12 months due to continued strong applicant demand from young professionals, as well those based outside of the capital looking for a pied-et-terre, which in many cases has led to multiple offers,” continued Tomlinson.

Outside of London, suburban markets held up the strongest in Q4 (-0.3%), while regional towns and cities felt the most downward pressure on rental prices (-1.7%), following a strong first nine months of the year. 

“The UK’s prime regional rental markets have experienced  strong growth over the past two years, which will constrain the capacity for significant increases over the coming year. In particular, regional towns and cities including Birmingham, Cambridge and Reading  performed strongly last year in response to back-to-work movements, but now demand has settled and stock is sticking in some locations, leading to price adjustments,” continues Tomlinson. 

“Domestic, needs-based demand is likely to remain robust in 2025 along with traditional migration from urban locations, but this may be tempered by increased accessibility to home ownership as interest rates are expected to fall.” 

Landlords are broadly less confident now than they were a year ago, according to Savills latest survey. It revealed that the top concerns include the ability to make a profit and the Renter’s Rights Bill, especially around increased notice periods to recover possession and the abolition of Section 21. 

Tomlinson concludes: “For some Landlord confidence has been shaken in response to upcoming regulatory changes, and we have certainly experienced an uptick in those considering the sales market in the second half of last year. But for the most part, landlords that have stayed put remain undeterred.

“The outlook for the prime rental market remains robust. Although growth has cooled, values are still expected to increase by more than +10% across all prime markets over the next five years.”

Share this article ...

Join the conversation: Login and have your say

Want to comment on this story? Our focus is on providing a platform for you to share your insights and views and we welcome contributions. All comments are screened using specialist software and may be reviewed by our editorial team before publication. Letting Agent Today reserves the right to edit, withhold or delete comments that violate our guidelines, including those that harass, degrade, or intimidate others. Users who post such content may be banned from commenting.
By commenting, you agree to our Commenting Terms of Use.
Subscribe to comments
Notify of
0 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments
Recommended for you
Related Articles
There are 48 units in this grade II listed block...
The move bolsters the group's presence in key regions of...
The successful candidate started in property back in 2018...
An independent lettings agency has been acquired and rebranded...
The Welsh Government is backing the call for a 'compensation'...
There will be a series of leasehold reforms announced in...
Recommended for you
Latest Features
A consultation document is being released today....
Propertymark says an audit can take stress out of HMRC...
There are 48 units in this grade II listed block...
Sponsored Content
Tenants want a place they can call home—somewhere comfortable, safe,...
Letting agencies face the dual challenge of keeping both landlords...
0
Would love your thoughts, please comment.x
()
x

Send to a friend

In order to send this article to a friend you must first login. Click on the button below to login or sign up.

No one likes pop-ups ...
But while you're here