Rents fell by 0.9% to an average of £1,268 last month, but “this will only provide the slightest breathing space in what continues to be a tough market,” according to data from HomeLet.
Tenant housing costs were down in all UK regions in the month to December, with the exception of the East Midlands, which saw rents rise 0.3%.
In London, rents fell 2.2% last month to £2,127, figures from the HomeLet Rental Index show.
However, lets have jumped 8% over the last year and have increased as much as 19.6% since 2021 – the equivalent of more than £200 extra per month.
The survey points out that in regions such as Scotland and Greater London, these figures have lifted by 23.4% and 21.4%, respectively, over the last two years.
It forecasts that tenants now spend 33.4% of their monthly wages on rent, a 2% increase since last year.
In Northern Ireland, this figure has increased by 10.7% in a year, rising to 38.1% of a renter’s monthly wages spent on accommodation.
HomeLet & Let Alliance chief executive Andy Halstead says: “The New Year starts with restrained optimism, as our records show a minor decrease in monthly costs for the second month in a row.
“So, while 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.
Halstead adds: “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% and 10% won’t be surprising.”
