Rental prices across the country generally saw a decrease from November to December 2023, new figures show.

Monthly rental prices in the UK are down by -0.9% in the UK in general, and as much as 2.2% in Greater London, saving tenants around £50 per calendar month (pcm) in rent, according to the data provided by HomeLet.

In all regions of the UK, with the exception of the East Midlands which saw a 0.3% increase, monthly rental prices have fallen, many of which for the second consecutive month. In the capital, a 2.2% decline was noted, one of the biggest drops seen in 2023 by HomeLet.

However, although the current downward trend in rental prices will go some way towards mitigating defaults, for the many landlords locked into the highest buy-to-let mortgage rates, this will only provide the slightest breathing space in what continues to be a tough market.

The green shoots of positivity also need to be viewed in the wider context of rental prices that soared by nearly 8.01% in the last year alone and have increased as much as 19.6% since 2021 – the equivalent of more than £200 extra per month.

In regions such as Scotland and Greater London, these figures surpass +20%, at +23.4% and +21.4% respectively. A huge increase in just two years.

As of January 2024, HomeLet predicts tenants in the UK are now forking out an average of 33.4% of their monthly wages on rental costs, a 2% increase since last year. In Northern Ireland, concern is growing as this figure has risen by 10.7% in a year, rising to 38.1%.

Andy Halstead, HomeLet & Let Alliance CEO, commented: “January is a good time for us to reflect on the previous year with our HomeLet Rental Index and make predictions as to what is to come in 2024. The New Year starts with restrained optimism, as our records show a minor decrease in monthly costs for the second month in a row.

“In fact, rental prices have fallen in all regions across the UK with the exception of the East Midlands. Even in the capital, where tenants now pay an average of £2,127pcm, rents have dropped by almost £50 per month since our November data was released.

“However, although these figures can be viewed as a short term win for tenants at least, let’s not kid ourselves that this represents anything resembling a breakthrough. We can safely say that 2023 was a year that most landlords and tenants will want to forget. Monthly rents increased by 8% in the matter of a year and have soared nearly 20% since 2021.

“So, whilst we are cautiously optimistic that things can improve for the UK rental sector, it’s too early to talk about an upturn in fortunes just yet. Of course, marginally lower rents put slightly more money in tenants’ pockets and partially reduce the likelihood of defaults, but the broader landscape is still incredibly challenging for all parties – with little sign of easing.

“Unless we see some dramatic changes, 2024 looks set to bring more of the same. Landlords will have to do battle with a familiar array of struggles, including a lack of stock, rising costs and prohibitively expensive buy-to-let mortgage rates.

“For those reasons, combined with lingering high inflation and the country’s financial crises, it’s unlikely we’ll ever see rental prices drop to the rates they were at when we were exiting the Covid-19 pandemic. The impact of that, alongside questionable budget decisions and overall weak management of British finances, means that we estimate by this time in 2025, rent increases of between 5% – 10% won’t be surprising.

“Nevertheless, to see a small decrease in rental prices across the country this month has been a pleasant surprise. For the sake of the UK’s renters, we hope that this trend continues into 2024. Similarly, we hope that mortgage rates will continue to fall and that landlords who are entering the market or are looking to renew their mortgage agreements can benefit from more affordable rates should the predicted interest rate cuts happen. We shall wait and see.”

The full breakdown of rent increases, variances and rent-to-income ratios can be found on the HomeLet website. The HomeLet Rental Index provides the most comprehensive and up-to-date data on rental values in the UK. The trends reported within the HomeLet Rental Index are from data on actual achieved rental values for just-agreed tenancies arranged in the most recent period – providing an in-depth insight into the lettings market and what’s happening right now across the UK.