Rental inflation slows

Rental inflation has slowed, which will be welcome news to renters, but there are still 12 people chasing every home for rent, says Zoopla. The portal’s latest research shows the rental market is gradually recovering after three years of a supply/demand imbalance. Rents are still increasing, but the rate of increase is slowing as affordability continues to bite.

Rental inflation is at 1.1% in London. The private rental market needs more supply to increase choice and help renters on lower to middle incomes who have struggled to keep pace with a 24% increase in rents for new lets over the last three years. The new Renters’ Rights Bill is likely to come into force later in 2025, resetting the relationship between renters and landlords, but also increasing the complexity and cost of being a landlord.

Investment in new supply will be lower as landlords assess the impact. In addition, the Government is also consulting on the need for private rented homes to have an energy rating of ‘A’, ‘B’ or ‘C’ before they can be let out from 2028. Almost half (45%) of rented homes require investment to get from a D rating to a C rating. Almost 1 in 5 (16%) of private rented homes are currently ‘E’, ‘F’ or ‘G’ rated, and as a result, would be more at risk of being lost from the rental market.