Are rents being overpriced in 2024?

Rightmove predicts that landlords will have to “balance priorities” to get rent prices right over the next 12 months.

  • Advertised lets are being reduced by up to 25%
  • The average tenant spends 50% of their income on rent
  • There is a limit to tenant affordability, with other costs factored in
  • Landlords are still looking for higher rents to help with increased mortgage payments due to higher interest rates
  • Rents increased by 10% in 2023 and are expected to increase another 5% in 2024

In the final months of 2023, the number of rental properties seeing a reduction in asking rent during marketing ticked up, with 23% of properties now seeing a reduction in advertised rent, compared to 16% this time last year, according to the platform.

Rightmove pointed out that a single renter with an average salary spends 51% of their wages on a typical rental home, compared to 49% this time last year, and 46% in 2019.

With rental affordability stretched, and the uptick in rental price reductions suggesting more renters are reaching an affordability ceiling, Rightmove believes landlords will need to balance the need to pay their mortgage with finding a good tenant they can develop a longer term relationship with and who can also afford the rent in their local area.

Christian Balshen, Rightmove lettings expert, said: “Landlords have always prioritised finding a good, reliable tenant for their home alongside the reality of having to pay the mortgage each month.

“Higher mortgage rates have had a knock-on effect for renters this year, as landlords who have faced these higher rates and therefore higher monthly costs, have needed, in some cases, to pass these on to tenants to some extent.

“Many tenants will have a cap on what they can or are prepared to pay in rent, and an increasing number of landlords are having to reduce their advertised rent, suggesting more are reaching this cap.

“It will be vital for landlords to work closely with a local letting agent this year, who will be an expert in the dynamics of their local area, to help them to find the right tenant at the right rent for their local area.”

Average advertised rents ended 2023 10% higher in the UK outside of London and 6% higher in the capital. Following on from this, Rightmove believes advertised rents could finish 5% higher by the end of 2024 outside of London, and 3% higher within London.