UK rents are set to grow by a further 17.6% over the next five years, according to Savills, as the imbalance between high demand and low supply is set to continue. However, there are signs in some markets, particularly London, that affordability constraints will press the brakes on growth.

While tenant demand has come down from its record highs of 2021 and 2022, it remains at elevated levels, according to RICS. At the same time, the latest listings data indicates that the number of available rental listings per active letting branch was 16% below their 2018-19 level in September.

As a result, properties are letting 20% faster in 2024 to date than during 2018/19, and there is further upward pressure on prices.

“High demand and low supply have been the influence behind the significant rental growth seen over the past few years. At a national level, this pattern looks set to continue with rents expected to rise above incomes again,” said Guy Whittaker, research analyst at Savills.

He added: “It is challenging to see where an increase in rental supply will come from in the next couple of years. The increase to the existing Stamp Duty Land Tax surcharge for second homes will likely dampen demand from new buy-to-let investors, and it will prevent some existing landlords from expanding their portfolios.”