UK Rents Saw a Significant 9% Rise in 2023
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Tenant Demand Led to 9% Rise in UK Rents in 2023
2023 was a year of unprecedented tenant demand and subdued property prices. While buyer demand fell due to high inflation and rising mortgage rates, more people entered the rental market. This made it harder for prospective tenants to find a suitable property.
This massive uptick in tenant demand and higher costs for landlords saw rental prices rise higher than many had anticipated at the start of the year. Understanding tenant demand and rental growth is crucial if you want to know how to make money from property in the UK.
The latest Goodlord Rental Index shines a light on just how much rents went up over 2023.
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How Was the UK Private Rental Sector in 2023?
According to the most recent Rental Index by Goodlord, the average rental rates for 2023 saw an almost 9% increase compared to the previous year.
Although there was a slight decrease in month-on-month rents from November 2023 to December 2023, the year-on-year data indicates a significant overall rise in rents throughout 2023, marked by record-breaking figures during the summer.
In addition to these increases, the void periods, representing the duration a rented property remains unoccupied between tenancies, reached historically low levels in 2023.
Read More: Looking for some property investment tips? Check out our guide on how to build a property portfolio. Additionally, you may want to read our property investment London guide.
UK Rental Rise Breaks Records
Throughout 2023, average rents in England experienced an almost 9% increase compared to the average in 2022.
In 2022, the average rent per property was £1,086. By 2023, the annual averages rose to £1,182, marking an 8.8% year-on-year uplift.
The peak rental rates of 2023 were observed between July and September, with these record-breaking months witnessing average rental property costs exceeding £1,300 for the first time. Tenants rushed to secure properties amid a sharp supply drop during this period.
July 2023 claimed the title for the highest rental averages of the year, reaching £1,367 per property across England. In contrast, the rental averages in July 2022 were £1,239, reflecting a 9% decrease.
As per the latest Index figures, December 2023 witnessed a 7% annual rent increase, reaching an average of £1,147. In comparison, in December 2022, rents stood at £1,071.
December, usually one of the quieter months for property rentals, experienced a slight month-on-month rent decrease from November’s figures. Across the UK, average rents fell by 1.7% overall during December, a trend typically influenced by reduced market activity over Christmas.
Rents of around £1,615 a month projected as a short let in a thriving Liverpool regeneration area
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What Did Experts Have to Say About the 2023 Rental Figures?
Managing Director of Insurance at Goodlord, Oli Sherlock, responded to the latest Goodlord Rental Index:
“It’s been a rollercoaster year for the market, with rents ending the year significantly up compared to 2022 figures.
“We’ve seen first-hand the unprecedented levels of demand for rental properties, as a growing tenant population has come face-to-face with the entrenched supply and demand issues facing our housing market.
“The lettings industry has striven to keep pace with this demand, as evidenced by some of the historically low void periods we’ve seen throughout 2023. Many agents will have been catching their breath over December, but it’s looking like 2024 will be another year of high rents, escalating demand, and ongoing regulatory changes which will keep the whole market on its toes.”
Rents of around £1,615 a month projected as a short let in a thriving Liverpool regeneration area
Enquire about Fox & Foundry today, our latest addition to Liverpool’s Pumpfields regeneration zone, with prices from £247,950.
Do Buy-to-Let Investors Stand to Enjoy More Rental Growth in 2024?
So, 2023 saw considerable rises in rental prices across the UK, but will those in buy-to-let property investment enjoy similar growth in 2024?
According to Savills, the UK stands to enjoy a 6% rise in rental growth throughout 2024. While this is less significant than the previous 12 months, it is worth mentioning that most forecasters expect property prices to drop in 2024 as homebuyers contend with the mortgage rates yet to return to their 2021 levels.
This means that buy-to-let investors could enjoy higher gross rental yields over the next year, particularly if they invest in areas with good-value properties and higher-than-average rental yields. Learn more about some of the buy-to-let loopholes that people are looking to find out more about.
For instance, buy-to-let properties for sale in Liverpool have an average property price of around £178,000 per the HM Land Registry UK House Price Index. In addition, Savills recently predicted that the North West could see a return of 9.2% in the buy-to-let market, making the region one of the most potentially lucrative places to buy property to rent out.
Further Reading: If you’d like to know more about regional buy-to-let, browse some of our buy-to-let city guides.
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