There has been a surge in the number of rental homes available to let in and around London as the supply-demand imbalance narrows.

According to Foxtons, the volume of new instructions in January 2024 was 25% higher than January 2023, as buy-to-let remains the investment of choice for many people.

From December to January, there was a 93% month-on-month increase in applicant demand, aligned with the usual seasonal trend in the lettings market. While demand was 10% lower than January 2023, compared to January in 2019 – the last year of a more traditional market – applicant demand was up 71% in January 2024.

Foxtons analysis of market data found that the rise in new instructions has continued from 2023, and London has seen a 65% increase in January 2024 compared with December 2023. The number of new instructions in January 2024 was 25% higher than in 2023.

Rental prices decreased by 1% in January 2024 compared to the same period in 2023, this small decrease in rental price can be attributed to increasing supply. The average rent achieved at the start of the year in London was £544. Central London commanded the highest rent achieved at £627, emphasizing its position as a prime rental location.

Foxtons year to date key market indicators

Gareth Atkins, managing director of lettings at Foxtons, said: “As forecasted, the start of 2024 has seen a more normalised lettings market, and as new properties come to the market, it will be important for landlords to keep track of how that effects their asset. The London lettings market can move quickly and be very localised, so a good agent providing timely market analysis and adjusting the strategies accordingly will help to attract the right qualified tenants.”

Sarah Tonkinson, managing director of Institutional PRS and Build to Rent at Foxtons, added: “We are not expecting massive price growth across London’s lettings market this year, around 0 and 2%. The market is still competitive; January 2024 had 56% more applicants per new instruction than in 2019 – which we consider to be the last year that there was a more normalised lettings market. So while there is opportunity, landlords may need to take a more active approach to pricing and work with agents to place tenants and minimise void periods.”

The year-on-year decrease of 26% in new renters per new instruction indicates a shift towards a more realistic lettings market, characterised by higher supply levels and less inflated demand. That being said, applicants per new instructions increased 56% from January 2019.