2024 is on the horizon, and many of us are starting to consider our property goals for the new year – but what will 2024 bring for the lettings market? In this piece, Centrick will be exploring five lettings market predictions for 2024, focusing on rental growth, regional city development, soaring yields, rental reform, and the rise in BTR.
Zoopla says that rents will grow beyond wages in 2024 as the rental market experiences heightened demand, and as many would-be buyers feel forced to remain in the rental market due to inaccessible mortgage rates. Rental growth is expected to sit at 9% compared to 6% wage growth, making rent increasingly difficult to afford for the average person.
The latest JLL predictions support this, with the property giant’s latest residential forecast stating that they “expect rental growth to exceed wage growth” for 2024, suggesting a 4.2% average increase in rental prices per annum over the next five years.
Manchester, Birmingham and Bristol are set to see the most impressive growth in England according to predictions from JLL. These cities are expected to see between 3.4% and 4% average annual rental price growth until 2027, which far exceeds the predicted national average of 3%.
In Scotland, Edinburgh and Glasgow are pinpointed as showing great promise for 2024 as well. Alongside Manchester, these two Scottish cities are predicted to see 5% rental growth over 2024 – the highest in the UK – as demand in the North increases significantly, thereby pushing up prices.
As always, rental growth in London is expected to continue being in a league of its own over the next year, with rental growth in both Greater and Central London being higher than the national average according to JLL’s latest report. The trajectory of rental growth in these cities – especially in England – is anticipated to continue well into 2027.
It’s no secret that property prices are decreasing, and rents are increasing. This bodes well for buy-to-let landlords, who will likely see their yields increase over 2024. The team at Hamptons suggests that the average gross yield could increase by 0.6% by 2025. As such, we anticipate the buy-to-let market to grow significantly in 2024 as prices are projected to stay low for a little while before rebounding by 2025.
It is also worth noting that the number of properties under construction is not abundant enough to meet house building targets, which in-turn is having a direct impact on yields. A lack of available stock in the rental market makes competition for PRS units stronger, thereby increasing prices. Furthermore, the conclusion of Help To Buy, paired with this lack of new property stock and inflating mortgage rates is set to keep more tenants in the rental market in the long-run, as tenants are deterred from buying. This prospect of ‘forever renting’ will be of great benefit to buy to let landlords, keeping their void periods to a minimum and their yields high as tenants eagerly vye for increasingly rare high-quality rental units.
The upcoming Renters Reform Bill is set to pass into legislation in 2024, and will shake up the private rental sector across Britain. The bill had its second hearing in parliament in October 2023, which saw the main tenet of the bill – the abolition of Section 21 – postponed until court reform had been actioned. However, many other aspects of the bill are set to come into law, such as the institution of periodic tenancies as standard, stricter regulations stopping landlords from discriminating against families, pet owners, and those on DSS, as well as changing standards for decent homes.
Overall, we believe this will improve the rental sector, giving tenants across the UK greater access to high-quality housing by keeping landlords responsible for the condition of their properties. In a rental landscape where competition between tenants is fierce, the suggestions set out by the Renter’s Reform Bill will be a welcome addition for tenants in 2024.
Lastly, 2024 looks set to be the year of Build To Rent. These purpose-built rental units are becoming increasingly commonplace across the UK, with 2024 set to be the most impressive year for BTR to date.
We predict that the rise of Single Family housing and sustainable construction efforts will be transformative for the build to rent sector in 2024. Although Rishi Sunak has recently scrapped green targets across the rental sector, there are still calls to create greener, more sustainable rental units across Britain in the years to come – especially from the increasingly environmentally conscious tenant demographic and a focus on energy efficiency with rising bills. In fact, a recent poll suggested that almost three quarters of tenants expected their landlord or property manager to implement green or energy-efficient technologies across their rental units.
Similarly, we expect Single Family Housing to increase in popularity across 2024. With many would-be buyers stuck in limbo unable to afford to purchase their own homes thanks to high mortgage rates, we anticipate that Single Family BTR accommodation will grow in popularity. BTR units won’t just be about large high-rise apartment complexes with gyms, concierges and on-site cinemas: BTR in 2024 will transcend this, offering detached and semi-detached homes, gardens and parking, the perfect rental units for families.
If you’re looking to gain an insight into the property market for 2024, check out our handy guide to Property Market Predictions for 2024, available to download through the form below. In the guide, you’ll find in-depth new homes, sales and lettings predictions for the year ahead, helping you to plan for 2024 and make the most informed decision when it comes to your next property transaction.
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