As 2023 draws to a close, we thought it would be a good opportunity to reflect on the events that shaped the rental market over the past twelve months and a chance to look into what we can expect from the year ahead.

What happened in 2023

After a hectic end to 2022, with huge demand for rooms and supply the lowest we’ve ever seen, it came as no surprise that things continued to heat up in the rental market in 2023.

Every region of the UK, plus all major towns and cities, saw record high rents this year

• UK average room rents exceeded £800 for the first time on record
• London averages exceeded £1,000 for the first time ever
  As a result, almost three quarters of renters said they’d either considered moving or were already planning to, in order to escape high rents

What’s the current situation

The ratio of people looking vs the number of rooms available has fallen back to its lowest point in over 2 years (July 2021).

• The UK is currently at 4.3 (high point was 8.1 in September 2022)
• London is at 3.8 (high point was 8.8 in September 2022)

Both the UK and London figures are roughly half as high as they were around a year ago, and average rents in London fell month on month in November for only the second time in almost 3 years. So things are calming slightly.

Statistics also show that demand has fallen and supply has increased since the worst point in late 2022. Summer demand levels in 2023 didn’t hit the peaks they did in 2022, and supply was also higher.

So, what about 2024?

What's clear is that we need more rental supply and that landlords are crucial to that. So we believe government should tax residential and short term lets equally.

Without going into too much detail (we'll be talking more about this in the coming weeks), it's become more advantageous for many landlords to offer short term lets instead of residential lets. Given we have a housing crisis, that seems an odd choice, to say the least.

We'd like Treasury to review the range of tax reliefs offered to the long-term rented and short-term rented sectors, with the aim of levelling the tax playing field between them and removing the distortions that are encouraging buy-to-let landlords to switch from providing long-term homes to holiday lets.

It's likely 2024 will see a General Election, and housing is likely to be a key issue across the board. Let's see what the parties have to say as the year unfolds.