The rental market boom is over according to our latest report, here's everything you need to know about today's rental market.
Rental growth slows to 2.8% in the 12 months to April 2025, down from 6.4% a year ago.
Supply rises by 17% but remains below average.
Rental demand declines by 16% but remains well above pre-pandemic levels.
Rents grow by 21% over 3 years, compared to 4% for house prices.
Rents on track for a 3-4% increase in 2025.
Rental growth ranges from 1.1% in Yorkshire and the Humber, to 5.3% in the north East.
In the 12 months ending April 2025, average rents for new tenancies rose by 2.8%. This is less than half of the 6.4% growth rate seen just one year earlier. The average rent (pcm) now stands at £1,287, with an increase of £35 over the past year. The decline is a result of weaker demand and ongoing affordability pressures.
While demand for rental properties has declined by 16% in the last year, it remains more than 60% above pre-pandemic levels. This is likely related to lower levels of migration for work and study, with the ONS reporting a 50% decline in net migration in 2024. Although lower, migration levels remain above average.
The decrease in rental demand is also a result of mortgage rates stabilising, alongside improved access to mortgages for first-time buyers, with more renters now able to get on the property ladder.
Changes to how banks assess affordability will make it easier for renters on higher incomes to access home ownership, further easing demand for rentals.
With a 17% increase in the number of rentals on the market, properties are taking slightly longer to let. Despite this, rental supply still remains 20% lower than pre-pandemic levels. With mortgage rates falling, there is an increase in landlords purchasing properties. Although rental growth has slowed, renters still face strong competition for rented homes.
Rental inflation has slowed across the whole of the UK. Current inflation levels range from 1.1% in Yorkshire and the Humber, to 5.3% in the north East.
In Scotland, rental inflation has slowed sharply from 9.1% a year ago, to 2.4% now. With limits on how much rents can increase within a tenancy being removed, landlords and agents face less pressure to secure high rents at the start of new tenancies. Removing this form of rental control has reduced rental inflation in Scotland, alongside underlying affordability pressures.
In Yorkshire and the Humber, rental growth has also weakened. This is especially prominent in cities with a high student population. For example, rents in Sheffield, Bradford and Leeds have fallen by 1.9%, 1.4% and 1.5% respectively.
At a more local level, rents continue to rise quickly in affordable areas, often adjacent to large cities, such as Wigan (8.8%), Carlisle (8.8%), Motherwell (8.3%), Chester (8.2%) and Blackburn (8.0%).
In addition to Leeds, there are other areas with falling rents. These include North West London (-0.2%), West Central London (-0.6%) and Dundee in Scotland (-2.1%).
Rental inflation has returned to pre-pandemic levels, with a marked slowdown over the last 12 months. UK cities registered some of the fastest increases in rents over 2022 and 2023, led by London and other large regional cities. Rental inflation accelerated across the rest of the country, but to a lesser degree.
Cities are now leading the slowdown in rental inflation. This is largely a result of new ‘Build to Rent’ developments increasing supply. Alongside this, affordability pressures and improved access to mortgages have also limited rental growth.
Kristjan Byfield, Co-founder of the Depositary and member of Zoopla's Lettings Advisory Board says "As the lettings market settles down, landlords will turn their focus to agents that deliver exemplary compliance and tenant services in the face of the imminent Renters Rights Bill era. In London, with capital appreciation stagnant for a while now, more moderate rental growth will increase the focus on the price of London property investors and the yields it warrants."
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Market conditions in the sales and rental markets have diverged in recent years, although rents and house prices have seen similar growth over the last decade. Average UK rents are 21% higher over the last 3 years, compared to just 4% for house prices.
Higher mortgage rates since 2022 reduced buying power in the sales market. This created a decline in demand from home buyers, which resulted in a fall in house prices in 2023. Home buyers were locked out of the sales market, boosting demand for rental properties, with high levels of migration also pushing rents higher.
The average monthly rent has increased by £219 over the last 3 years. This is broadly the same as the increase in average mortgage repayments. The average annual UK rent has increased by £2,650 over the last 3 years, from £12,800 to £15,450 today.
Julie Ford, rental market expert at Gothard Rowe and Zoopla Lettings Advisory Board member says "Low rental supply and rising rents will exacerbate the challenges tenants face under the Renters Rights Bill, as landlords may become more selective or withdraw properties from the market. Without sufficient safeguards, many renters could struggle with affordability and limited housing options."
The rental market remains on track for a rental inflation of 3-4% over 2025. Rents will keep increasing at an above-average rate in more affordable areas close to large cities. Easing restrictions in mortgage lending will help some higher-income renters buy properties. This will mean slower rental growth in the higher rental price brackets, particularly in large cities.
Despite improvements in the mortgage market, home ownership remains out of reach to those on lower to middle incomes, with small deposits. This is a large and important group of private renters, who still face strong competition for rental properties.
Those on lower incomes tend to be limited when it comes to moving house, which risks triggering higher rental costs. Policymakers need to prioritise measures to grow the supply of affordable rented homes to boost choice for lower income renters.
While landlord investment has been low in recent years, the strong growth in rents has boosted letting and management revenues. There's still some catch-up growth in rents to feed through from tenancies agreed over the last 12-24 months.
The focus for agents should return to onboarding the 50% of landlords who privately manage their properties, and those who are in the market for property management. Many landlords are also concerned about what the Renters Rights Bill may mean for them, which could result in more landlords moving over to property management services.
The Zoopla Rental Market Report is a repeat transaction index, based on asking rents and adjusted to reflect achieved rents. The index is designed to accurately track the change in rental pricing for UK housing.
Download the full June 2025 Rental Market Report
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