The findings by property listing website Zoopla claimed rents had been rising so fast that they have now “overshot in some cities”.
Asking rents on the website have risen by 5.7% during the past 12 months to June of this year.
It means that the average UK asking rent now stands at £1,232 per month, which is an increase of £66 per month compared to this time last year.
At the same time, demand for rental homes has fallen by 39% during the past year.
Zoopla said it was an indication that the rental market is shifting from being seen as “red hot” to “hot”.
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Harriet Scanlan, lettings manager at Richmond estate agent Antony Roberts, said: “After a frenzied period for the lettings market, tenants are finding they have a bit longer to make a decision and there isn’t quite the same pressure they were under just a few months ago.
“That said, there is still strong demand for the best properties in good locations close to transport links and amenities, so if tenants are after those, they will need to be organised and move quickly.”
Falling rent prices in many cities
Zoopla said rents have risen by just 1.2% during the first six months of this year.
Additionally, there have been falls in rents across several cities – including Nottingham, which is down 0.6%, London, which is down 0.4%, Brighton, which is down 0.2%, and Glasgow, which is also down 0.2% – as demand softens and supply increases.
However, rents are still rising at an above-average rate in more affordable areas.
These include areas next to large cities and where renting continues to be better value.
For example, Rochdale has seen rents increase by 6.9%, while both Doncaster and Southend have seen rents grow by 5%.
A similar pattern of rental growth is being seen across London boroughs, with values falling in inner areas such as Tower Hamlets, Newham and Greenwich.
Indeed, more than a third of London boroughs have seen rents falling in the first six months of this year, well below the levels recorded a year ago.
Boost in rental supply
The number of homes available to rent has been an issue in recent years, but supply is slowly rising, according to Zoopla.
Zoopla said estate agents have 17% more homes to rent than a year ago.
It attributed the increase in supply to a “small but not insignificant” number of landlords who are selling up due to increasing pressures.
Landlords have faced hikes in tax and regulation, with more changes on the horizon – including the prospect of no-fault evictions being abolished.
Zoopla also explained that lower mortgage rates have made it easier for first-time buyers to buy homes and leave the rental sector.
The average two-year fixed rate mortgage has a rate of 5.62%, down from above 6% in the summer of 2023.
In addition, more new homes are being sold to corporate landlords for renting, according to Zoopla.
Richard Donnell, executive director at Zoopla, said: “Renters will welcome the fact that rents for new lets are rising at their slowest pace for three years.
“Rents have risen so fast they have overshot in some cities and we are seeing modest falls in rents in some cities as rents adjust to weaker demand and modest increases in the availability of homes for rent.
“Rents continue to rise more quickly in more affordable areas adjacent to large cities as renters seek better value for money.
“Rents are on track to be 3-4% higher over 2024, which is more than half the level recorded last year and below earnings growth, providing some modest relief for the UK’s private renters.”
This article was first published on YourMoney.com‘s sister site, Mortgage Solutions. Read: Growth in rental asking prices slows to 5.7% – Zoopla
