Letting Agency Trends & Rent Changes in 2023

According to new research, the private residential sector saw 1,900 letting agency branches shut last year.

Data reveals 1,906 branches closed, offset by 1,247 openings, leaving a net deficit of 659.

The UK had 14,544 letting agencies at the end of 2023, said Katy Billany, chief executive of property lead generation company TwentyEA.

“The closures are largely related to the general uncertainty surrounding the property market and the wider economy throughout 2023,” she said. "Fewer tenancies have been agreed due to the shortage of lettings stock.”

The survey highlighted a trend for self-employed letting agents operating without an office but under umbrella brands, such as Keller Williams.

Rents up everywhere except London

Meanwhile, the Office for National Statistics has published data for December showing rents soared at the fastest rate on record in 2023.

Private rents ended the year up 6.2 per cent - the highest increase since records started in January 2016.

The ONS says rents increased everywhere except London, where rents were down 0.1 per cent from the capital’s record high of 6.9 per cent in November to 6.8 per cent in December.

Yorkshire and The Humber tied with the South East for the highest annual regional rent rise of 6.0 per cent. The lowest rent rise was 4.6 per cent in the North-East.

Separate data from tenant reference agency Homelet shows the average private rent in December was £1,268 a month - down 0.9 per cent from November. Although rents decreased slightly at the end of the year, the annual increase was 8.01 per cent.

Midlands landlords see the highest rent rise

Tenants were paying less in every region except the East Midlands, where landlords enjoyed a 0.3 per cent rise to an average rent of £875 a month, and the West Midlands, where rents stayed the same as November at a monthly average of £940.

Average rents in London dropped 2.2 per cent in December from £2,168 monthly to £2,127.

Homelet CEO Andy Halstead said: “While we are cautiously optimistic that things can improve for the UK rental sector, it’s too early to talk about an upturn in fortunes just yet. Of course, marginally lower rents put slightly more money in tenants’ pockets and partially reduce the likelihood of def. However, the broader landscape is still incredibly challenging for all parties, with little sign of easing.

“Unless we see some dramatic changes, 2024 looks set to bring more of the same. Landlords will have to battle a familiar array of struggles, including a lack of stock, rising costs and prohibitively expensive buy-to-let mortgage rates.”

Buy-to-let rents FAQ

Why do rent indices show different results?

Check the data carefully. The various indices cover different periods, and the demographics of the samples vary between reports.

The Office for National Statistics (ONS) has the most extensive sample, so it should return the most reliable figures. However, the time to collect and analyse the statistics often means the ONS data lags a month behind the rest of the sector.

The Association of Residential Letting Agents (ARLA) derives insights from letting agents and provides a sentiment survey rather than measurable data.

Homelet statistics come from customer data, which may only partially reflect the market.

Should landlords raise rents in line with the stats?

Fixing rents is a business decision for landlords. Rent statistics indicate how the market moves but do not reflect demand from tenants and property standards in local neighbourhoods.

Remember that the data is historical, showing what's happened rather than what will happen.

Why do the rent indices show different results?

Check the data carefully. Other indices cover different periods, and the samples vary between reports.

The ONS has the most extensive sample, so the most reliable figures should return, but the time to collect and analyse the statistics often means the ONS data lags behind the rest of the sector.

ARLA derives insights from letting agents and provides what's known in the trade as a sentiment survey based on what they think rather than data.

Homelet statistics come from customer data, which may only partially reflect the market.

Should landlords raise rents in line with the stats?

That's a business decision for landlords. Rent statistics indicate how the market moves but do not reflect demand from tenants and property standards in local neighbourhoods.

Remember that the data is historical, showing what's happened rather than what will happen.

Which rent index is the best?

That's up to individual landlords. For instance, one index with a solid customer base in the same area as a landlord's portfolio may align more closely with market rents for that neighbourhood.

Average data is only good if you have an average home, and median rents will cover everything from a room in a shared house to a four-bedroom home.

Extra research with local letting agents will likely indicate better where a landlord should pitch a competitive rent and stop them from under or over-selling.