The latest market analysis by estate agency Chestertons, comparing January 2023 to the same month last year, shows the rental market continuing to normalise thanks to the improved availability of rental properties:

The number of properties available to rent through Chestertons was 36% higher than a year ago,

Richard Davies, COO of Chestertons, says: “London’s property market has always been extremely competitive with many renters willing to offer above asking rent to secure a property.

“As we are now seeing more properties coming on the market, some landlords are prepared to reduce their asking rent. This is a key sign that the rental market is rebalancing following incredibly rapid hikes in rent seen in 2021 and 2022.”

Chestertons predicts that London rents will continue to grow by up to 5% over 2023 before plateauing in 2024.

Looking beyond London, price growth in the rental market is predicted to continue throughout 2023, but “there are tentative signs that significant upward pressure on rents is starting to relent”, reports Nicky Stevenson, MD of Fine & Country UK.

Expanding, she adds that while the average monthly rents are still rising, indications suggest that the supply constraints which have underpinned record rental rises are slowly beginning to ease.

“Rightmove report the number of available homes to rent in the final quarter of 2022 was up 13%, with the number of new properties to let up 5% year-on-year. However, significant pressure remains,” Stevenson commented.

She notes that affordability concerns are a key consideration across the market and a large portion of agents confirm that more than half of renters continue to choose to renew their lease as opposed to moving. Landlords also prefer to retain good renters and avoid unnecessary costs. The average prime market rent is now £3,718. The 16.7% annual price growth has moderated slightly from its peak last summer.

Stevenson says that more than five million households in England and Wales, equivalent to one in every five, now live in the private rented sector according to the recently released findings from Census 2021.

She added: “The number of households living in the sector has risen 29% since 2011, with 89% renting from a private landlord or letting agency.

“In London there are now more than one million households in the sector, compared to 1.5 million owner occupiers. All regions in England and Wales have seen an increase in the number of households in the private rented sector since 2011, with the greatest increases observed in the East of England, East Midlands, and West Midlands.”