The UK faces a unique economic predicament in 2024. With inflation soaring to a 40-year high and the Bank of England raising interest rates to combat it, the cost of living is squeezing many households. Simultaneously, fears of a potential recession loom large. While the recessionary impact on rental prices remains uncertain, understanding the interplay of these factors is crucial.
The Pressure Cooker: Rising Costs and Squeezed Incomes
The current cost-of-living crisis, fuelled by rising energy prices and supply chain disruptions, is putting immense pressure on renters. According to the Office for National Statistics (ONS), inflation reached 10.5% in January 2024, with essentials like food and energy seeing steeper increases. This leaves many renters with less disposable income, potentially impacting their ability to afford rising rents.
Tightening the Grip: Interest Rates and Landlord Decisions
In response to inflation, the Bank of England has been steadily raising interest rates since December 2021. This directly impacts buy-to-let mortgages, potentially increasing costs for landlords. While some might pass these increased costs onto tenants through higher rents, others might choose to sell their properties, further reducing the already limited rental stock.
A Delicate Balancing Act: Supply, Demand, and Price Predictions
Predicting the precise impact on rental prices is complex. On the one hand, economic hardship caused by the cost-of-living crisis could lead to some renters downsizing or even moving back in with family, easing competition and potentially slowing rent growth. Conversely, continued low housing supply and high demand, especially in urban areas, could see rents rise despite economic difficulties.
Expert Opinions: Navigating Uncertainty
Experts offer diverse perspectives. Savills, predicts rents to continue rising but at a slower pace compared to 2023. Others like The Ringley Group suggest a potential plateau or even slight price drops depending on the severity of the recession.
Regardless of the eventual impact of the looming recession, Rentola, as an all in one rental search engine, can help you find the most affordable rentals in the market, putting you directly in contact with landlords. Try Rentola today for only £1 across the first 7 days of your subscription (subsequently, the full subscription cost is £35, and is paid every 28 days).
