New research from Zoopla reveals that rental inflation across the UK has hit its lowest level in nearly three years, driven in part by a significant decrease in demand from international students.
The data, which indicates a shift in the rental market from “red-hot” to merely “hot,” suggests that affordability pressures and changes in immigration patterns are contributing to a cooling in rent prices.
According to Zoopla’s latest analysis, conducted for the BBC, rental inflation in the UK has slowed to its lowest rate in almost three years, with demand for rented homes declining by 39% over the past year.
This trend is partly attributed to a decrease in international student numbers, leading to a cooling of the rental market that had previously been fuelled by a surge in student accommodation needs.
Over the last 12 months, rents for new lets have risen by 5.7%, reaching an average of £1,232 per month. However, the rate of increase has slowed significantly in the past six months, with rents rising by just 1.6%—the smallest increase since 2021.
Zoopla suggests that the rental market’s cooling is largely due to affordability issues, with rental prices now overshooting what many tenants, including students, can afford to pay.
The decline in rental demand has been particularly noticeable in cities such as Nottingham, London, Brighton, and Glasgow, where rents have fallen during the first half of 2024. The only exceptions were Bradford and Liverpool, where rent inflation persisted due to an oversupply of student housing.
This trend comes as the maximum maintenance loan for students in England is nearly £2,000 less than it would have been had it kept pace with inflation since 2020. With the threshold for means-tested loans remaining unchanged since 2007, many students are struggling to afford rising rents.
The dramatic increase in international student numbers since 2019 had previously driven up demand for rental properties, contributing to the rapid rise in rent prices. However, recent changes in immigration policies, coupled with the high cost of living and unfavourable currency exchange rates—especially for students from countries like Nigeria—are now cooling the market.
Zoopla’s findings suggest that the rental market, previously overheated by a “classic bubble,” is now experiencing a correction. The data underscores the need for the education sector to take greater responsibility for ensuring that student accommodation remains affordable and that both campus and community facilities can support the growing student population.
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