Executive summary
- Rental inflation has slowed to 11.1%, from a high of 12.3% in mid-2022
- A strong labour market and record immigration drove demand in 2022. Private rented housing supply has grown just 1% since 2016
- Higher mortgage rates have further weakened the economics of investing for landlords, impacting new investment in rental supply
- Landlords ‘searching for yield’ to offset rising costs will push some to let into different sectors of the private rental market
- The growth in overall rental supply is set to remain limited in 2023. Demand is expected to remain above average but lower than 2022
- Rental inflation for new lets will slow to 4-5% by the year end. The slowdown could be rapid in inner London and other city centres.
