The average advertised rent outside London has passed £1,400 a month for the first time, reaching a record £1,418, according to Rightmove.
The figure is up 1.5% on the quarter. Annual rental growth has settled at 2.4%, a steadier pace than the roughly 10% a year recorded between 2021 and 2023.
Nationally, supply and demand sit close to balance. The number of available rental homes is 2% lower than a year ago, and renter demand is down by around 2%, so constrained supply continues to push rents up without the severe imbalance behind the rapid rises of previous years.
London rents are climbing faster. The capital’s average advertised rent reached a record £2,825 a month, with annual growth accelerating to 3.2%, ahead of the 2.4% outside London. The pattern has shifted through the post-pandemic cycle.
London rents fell in the early pandemic years as tenants left the city, then rose faster than the rest of Great Britain as renters returned. Affordability pressures meant growth was stronger outside the capital over the last two years, but the latest figures suggest momentum is returning to London.
A tighter supply squeeze appears to be driving the London increase. The total number of homes available to rent is down 9% on a year-on-year basis, and new rental listings have fallen 7%, while renter demand is up 6%, a bigger imbalance than the average outside the capital.
Rents are mostly rising faster in cheaper parts of Great Britain, where advertised rents have more room to grow. London still ranks third among regions for annual growth, at 3.2%. Rightmove suggests employment opportunities and office attendance requirements may be bringing renters to the capital, while higher mortgage rates and weaker demand in the London sales market could be keeping some tenants renting for longer.
Landlord activity is also shaping supply. The proportion of homes for sale that were previously available to rent, an indicator of landlords selling up, has held at around 13% this year, only slightly above last year’s 12%. The proportion of homes to rent that were previously for sale fell from 17% to 15%. The shift is small, but it points to reduced landlord investment.
Financing costs are also adding to the pressure. The average two-year fixed buy-to-let mortgage rate stands at around 5.34%, compared with 4.16% before the war in Iran started. Rightmove says rental homes remain in short supply, and that elevated mortgage rates continue to make property investment less attractive for prospective landlords, particularly in areas where capital growth may be limited.
“Average rents have reached another new record and have now surpassed £1,400 per month outside London for the first time,” said Colleen Babcock, property expert at Rightmove. “However, beneath the headline figure, rental growth has continued to settle compared with the exceptionally fast pace we saw a few years ago.
"Supply remains constrained, which is continuing to put upward pressure on rents, but demand is also more measured. That has helped to create a more balanced market overall, even though affordability remains a challenge for many renters.”
“One of the biggest challenges for many landlords at the moment is managing the properties they already own when the time to remortgage comes around,” noted Matt Smith, mortgage expert at Rightmove. “New buy-to-let investment has been relatively subdued for some time, and some landlords are still reaching the end of much cheaper fixed-rate deals taken out when borrowing costs were lower.
“For those landlords, moving onto a higher mortgage rate can have a significant impact on monthly costs and rental yields. With rent reviews now generally limited to once a year, landlords need to plan carefully alongside refinancing. Where the numbers no longer add up, higher mortgage costs could ultimately influence decisions about whether to remortgage or sell a rental property.”
“London’s rental market is showing renewed pressure, with rising tenant demand and fewer available properties increasing competition for the best homes,” explained Kesha Foss-Smith, head of lettings at John D Wood & Co. “Higher mortgage costs are also keeping some would-be buyers in the rental sector for longer, adding to demand, particularly for smaller properties.
“Despite tighter supply, value for money remains critical. Tenants are increasingly discerning, especially at the upper end of the market, making realistic pricing and high-quality presentation essential. Looking ahead, maintaining a healthy supply of rental homes will be key to easing competition and supporting long-term market stability.”
“The latest figures highlight why the rental market needs to be judged on more than the rate at which rents are rising,” comments Kim Lidbury, president of ARLA Propertymark (Association of Residential Letting Agents). “Although rental growth has moderated, advertised rents remain at record levels, and the availability of suitable homes continues to be a major concern for tenants.
“The cost and complexity of providing rental housing remain important considerations for landlords. Financing costs, taxation and regulatory requirements all influence decisions about whether to invest in, retain or sell rental property. These pressures can have wider implications for the availability and choice of homes for tenants.
“Letting agents also have an important role in helping landlords meet their responsibilities, maintain property standards and provide a professional service to tenants. A well-functioning private rented sector depends on responsible landlords being able to operate sustainably, alongside effective protections for renters.
“Ultimately, the priority is to ensure there are enough good-quality homes available to rent, at a range of price points, while maintaining a rental sector that works for both landlords and tenants. A slowdown in rental growth is welcome, but it will not, on its own, resolve the affordability challenges facing renters.”
