What are the 2024 forecasts for rental income?
Delve into the projected expectations for rental income in 2024
One of the best things about being a landlord is that you can make money from property in two ways: capital growth and rental income profit.
And the good news is, although average capital values are falling back, it’s highly unlikely that the money you have made over the last few years will be wiped out.
The strong rent growth we’ve seen over the past couple of years looks set to continue.
The leading rental market forecasters expect we will see rent growth across the UK at between five and six per cent in 2024, exceeding wage growth.
This is because, regardless of affordability being stretched for some tenants, a worsening undersupply of rental stock will naturally keep competition and therefore prices high.
Property rental forecasts
Savills(Nov 23)
Knight Frank (Oct 23)
JLL(Nov 23)
2024
Compounded 2024-28
5 year cumulative
Cumulative 2024-28
UK
6.0%
18.1%
5.0%
22.2%
22.8%
Greater London
5.5%
18.2%
23.3%
25.8%
Source: Propertychecklists.co.uk
Increase
Decrease
Stay the same
A combination of a rising number of tenants looking for accommodation and the number of new landlords entering the private rented sector failing to compensate for the number leaving, has led to the current crisis.
There are various reasons why landlords are choosing to sell up. Some have owned property since the early days of buy to let and have simply come to the end of their investment journey.
Many have built a significant amount of equity over the last 20-25 years and are now looking to retire.
Others have felt forced out through increased taxation and legislation – and, more recently, increased mortgage costs. HMO landlords have been particularly badly hit because of the additional rising cost of utilities.
Meanwhile, the increased stamp duty for additional properties and lower potential profit margins has done nothing to either attract new landlords or encourage existing landlords to expand their portfolios.
All that said, there is undoubtedly still money to be made from providing good quality rental accommodation.
If rents continue to outstrip inflation as forecast, that’s good news for landlords’ rental profits, and with capital values also set to increase at a healthy rate, that should boost overall returns.
They key is to work with local market experts who can help you invest and let successfully (see the next few sections).
