In the past few years, the rental market across Lancaster and the UK has seen a period of high growth, with demand pushing rental prices to new heights. However, recent data indicates that the pace of rental growth has started to slow. Across the UK’s largest cities, rental growth has reduced from an average of 10% last year to 8% currently. This trend is even more marked in London, where rental growth has dropped sharply from 13% to just 5%.
Affordability: A Key Factor in Rental Demand
One of the central factors affecting rental growth is affordability. Unlike buyers, renters have the flexibility to move relatively frequently and may choose locations based on changing affordability. As rental prices continue to rise, more tenants are seeking budget-friendly alternatives, particularly in areas with lower living costs.
The affordability ratio—measuring the percentage of gross earnings that renters spend on their share of rent—demonstrates this trend. In London, affordability has stretched to 32.1%, above the five-year average of 30%. Across the UK’s 60 largest cities, renters are currently spending 25.8% of their gross earnings on rent, a moderate increase from the five-year average of 24.5%. This data, sourced from Dataloft by PriceHubble and focused on flats only, illustrates how stretched affordability in many cities is slowing rental growth as tenants evaluate their options carefully.
Why This Matters for Landlords
For landlords, these changes are a reminder of the importance of understanding market dynamics to optimize rental strategy. In a market where renters are making more affordability-driven choices, a strategic approach to pricing and tenant retention is essential. Knowing your local affordability ratios and staying informed on broader rental trends can help you position your property competitively while maintaining consistent demand.
Moving Forward
For property owners and landlords, now is an excellent time to review rental pricing and marketing strategies. By balancing fair pricing with tenant needs, landlords can continue to attract reliable renters even as the market stabilizes. Affordability may have become a deciding factor in rental demand, but with the right approach, property owners can continue to achieve favorable outcomes.
Staying informed about these trends not only protects your investment but also aligns with tenants’ evolving preferences in today’s market.
Do you have any questions? At JDG we manage over 300 rental properties across the city. We like to keep our landlords fully informed and upto date as to what is happening in the market. Can we help you?
My name is Josh Heron. You can call me on 01524 843322 or email me at josh@jdg.co.uk
Thanks for reading
Josh