As we move through the year the UK residential lettings market seems to be in a period of adjustment best described as cautious optimism. Primarily shaped by economic recovery, interest rate changes, and evolving supply-demand dynamics. Here’s a summary of what we feel are the key trends and forecasts:
Rental Market Trends
UK rents are forecast to grow by a modest 3.0% in 2025, with London rents expected to rise by 4.0%. This is a slowdown from the sharp increases seen in 2024, when average rents rose by 9.0% nationwide.
Despite slower growth, affordability remains a concern in all areas. Real wage growth and lower inflation are expected to ease some of this pressure and here at Pure we feel rents may have reached the top of the curve.
The market continues to face a chronic shortage of rental properties, 2024 saw some landlords exit due to rising costs and regulatory changes and whilst some Build-to-Rent developments are expanding, they are no where near sufficient to meet tenant demand.
Economic and Policy Influences
The Bank of England is expected to implement three base rate cuts in 2025, improving mortgage affordability and potentially encouraging some new landlords and also existing landlords to stay in the market
Changes to the National Planning Policy Framework (NPPF) and the introduction of the “grey belt” may eventually increase housing supply, though the impact will be gradual and take some years to
Outlook
The lettings market is stabilizing after a volatile few years. While rent growth is moderating, structural supply issues and affordability constraints will continue to shape the market.
Tenant demand remains exceptionally strong, especially in urban areas, but affordability ceilings may limit how much further rents can rise.
Keighley & Aire Valley
The local market pretty much mirrors the national trends. Each new letting instruction attracts considerable interest with some properties receiving upwards of 30 enquiries and regularly over 10 people keen to apply.
Summary
Clearly the letting market remains stronger than ever and once the Renters Rights Bill comes into force and we get used to the new rules the new pressures faced by landlords over the previous few years should subside leaving us with an easier path to navigate in the coming years.
If you have any questions in relation to his article or indeed Residential Lettings and Property Management in general please contact lee@purepropertylettings.co.uk