UK Rental Market Faces “Growing Challenges” as Demand Increases and Supply Falls

The UK rental market is facing “growing challenges” according to the Royal Institution of Chartered Surveyors (RICS) as demand in the market continues to rise with dwindling levels of supply.

Tenant demand in the UK increases to 35 from 10 in just one month

According to the latest survey conducted by RICS, rental demand in the UK market is continuing to increase while the number of homes supplied is decreasing with tenant demand across the country more than tripling to 35 in May 2024 compared to just 10 in April.

In the same period, landlord instructions on newly available rental properties were flat.

The closely monitored survey from RICS measures the differences between the number of UK surveyors registering rises and falls in property instructions and rental demand.

Rental prices will continue to increase for the foreseeable future

The gap between supply and demand in the UK rental market is increasing exponentially, meaning that the average rental prices will continue to skyrocket for the foreseeable future, RICS reports.

“The UK’s lettings market is facing growing challenges, and it will be interesting to see how the political parties address this.”
Justin Young, Chief Executive of RICS.

This data comes as tenancy processing platform, Goodlord, reports that the average UK rent has hit its highest level since October 2023 with rents across the country increasing by over 1% between April and May of this year – meaning rents are now 6% higher year-on-year.

More attention needs to be paid to the rental market by political parties

The RICS survey was conducted amidst speculation regarding the upcoming General Election on 4^th July 2024 as both the Labour and Conservative parties have been vocal about their proposed measures to help people get onto the property ladder should they win, however, there has been little attention paid to the rental market.

As outlined in their manifestos, the Labour party have proposed a government mortgage guarantee scheme nicknamed the ‘freedom to buy’ while the Conservatives have vowed to abolish stamp duty for first-time buyers on homes worth less than £425,000.

The lack of consideration for the UK rental market and the primary focus on homeownership disregards the many young people who choose to rent for the social benefits and flexibility, and those who can no longer afford to purchase their own property due to high interest rates.

“Both parties have staked their claims as being the party of homeownership, but for that to be the case, greater attention must be paid to improving conditions for Generation Rent.”
Justin Young, Chief Executive of RICS.

RICS survey also demonstrated a decline in new buyer demand in May as their figure fell into the negative at minus eight – the lowest reading since November 2023 – which has been attributed to a “drop in confidence regarding an imminent cut in interest rates”.

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