London rents rise at slowest pace since 2021; fall outside of city for first time since 2019

LONDON – London rent inflation cooled to the weakest in three years, bringing some relief to the British capital’s hard-pressed tenants, according to Rightmove. 

The average advertised rent rose just 0.1 per cent to £2,695 (S$4,540) per month in the fourth quarter of 2024, the property website said on Jan 28. That is up 2.4 per cent from a year earlier, the slowest pace of increase since 2021.

Outside of London, rents fell for the first time since 2019, the report showed. While rental prices are still well above 2023 levels, the 0.2 per cent decline marks a “key milestone” suggesting the rampant inflation seen in recent years is coming to an end.

“We’re seeing a cooling of what has been a ferociously hot rental market over the last year, where tenants have endured intense competition and consistent rental inflation,” said Mr Alex Bloxham, partner and head of residential lettings at Bidwells.

“Landlords are continuing to invest in their buy-to-let portfolios while more tenants are choosing to stay put, likely due to continued macroeconomic uncertainty and the upfront costs involved in relocating.”

The report offers a glimmer of hope for tenants, who have been hit by a shortage of places to rent after many landlords opted to sell due to high mortgage costs and Labour proposals to ban evictions without cause and tighten green requirements.

London rents are almost a third higher than before the Covid-19 pandemic, the equivalent of £630 per month, Rightmove said.

Official data taking into account the total stock of rentals showed prices rising 9 per cent in 2024. High housing costs tie up money that could otherwise be spent elsewhere, threatening Labour’s plans to boost growth.

However, the balance between supply and demand has been improving in recent months, said Rightmove’s property expert Colleen Babcock. Larger landlords investing in buy-to-let properties are helping to plug the supply gap, leading to a 13 per cent year-on-year increase in the number of properties available for rent across the UK, according to Rightmove.

Rental properties are also being freed up as some tenants become buyers of homes, lured by lower interest rates and rising real wages.

There are also fewer tenants looking to move house amid growing uncertainty. Households are increasingly worried about potential job cuts after Labour raised employment costs in the budget, while they also face cost-of-living pressures from rising energy bills and the return of food inflation.

Still, the market remains significantly busier than before the pandemic. There are about 10 tenant applications per rental property, almost double the pre-Covid-19 norm.

“This mismatch will continue to be a defining feature in the market, but the steady improvement we’re seeing will put downward pressure on rents and represents positive news for renters,” Mr Bloxham said. BLOOMBERG