"While demand for rented homes has been cooling, it remains well above pre-pandemic levels, sustaining continued competition for rented homes and a steady upward pressure on rents"
- Richard Donnell - Zoopla
Rental growth across the UK has cooled sharply, according to Zoopla’s latest Rental Market Report, bringing an end to the surge seen over the past few years.
In the 12 months to April 2025, average rents for new lets increased by 2.8%, less than half the 6.4% growth recorded a year earlier. This marks the slowest pace of rental growth since July 2021. The average rent now stands at £1,287 a month, £35 higher than last year.
Regional slowdown puts pressure on previously hot markets
Every UK region has seen a slowdown in rental growth over the past year, with the sharpest decline in Yorkshire and the Humber. There, growth fell to 1.1%, down from 6.4% in 2024. This drop is attributed to weaker performance in university cities such as Sheffield (1.9%), Bradford (1.4%) and Leeds, which posted a decline of -1.5%.
The North East also saw slower growth, down from 9.4% in 2024 to 5.2%. In Scotland, rental growth declined from 9.1% to 2.4%, with Dundee recording a fall of -2.1%, reversing its 5.8% growth last year. The change in Scotland follows the easing of rent controls and ongoing affordability pressures.
London rents have also stabilised, with overall growth at 1.5% and average rents reaching £2,175 a month. Inner London districts such as NW and WC postcodes recorded small declines of -0.2% and -0.6%, respectively.
However, some more affordable areas close to large cities continue to post strong gains. Rents rose by 8.8% in both Wigan and Carlisle, while Chester saw an 8.2% increase. Even so, only five postal areas are now seeing annual growth over 8%, down from 52 a year ago.
Rental growth outpaces house prices fivefold
The gap between the sales and rental markets has widened sharply over the past three years. Since 2022, average UK rents for new tenancies have increased by 21%, compared with a 4% rise in house prices.
This £219 monthly rise in rent is roughly equal to the increase in average mortgage repayments. Over the past three years, the average annual rent has jumped by £2,650, from £12,800 to £15,450.
Fewer renters, but supply remains tight
The moderation in rental growth is largely being driven by falling demand and affordability constraints rather than an increase in the supply of rental homes. Zoopla’s data shows rental demand is 16% lower than a year ago, though it remains more than 60% higher than pre-pandemic levels. A 50% drop in long-term net migration during 2024 is one of the factors behind this change.
More first-time buyers entering the market has also eased pressure on rentals. Stability in mortgage rates and updated affordability assessments are allowing more higher-income renters to transition into home ownership.
Still, the number of homes available to rent remains limited. While supply is 17% higher than a year ago, it is 20% below pre-pandemic levels. A drop in new investment from private and corporate landlords continues to constrain growth in the rental sector.
Zoopla expects rents to increase by a further 3–4% over the remainder of 2025.
Market sentiment remains cautious
“Rents rising at their lowest level for four years will be welcome news for renters across the country. The average annual cost of renting is over £2,500 a year higher than three years ago, the same as the increase in average mortgage repayments for homeowners," comments Richard Donnell, executive director of research at Zoopla.
“While demand for rented homes has been cooling, it remains well above pre-pandemic levels, sustaining continued competition for rented homes and a steady upward pressure on rents. The pressures are particularly acute for lower to middle incomes with little hope of buying a home and where moving home can trigger much higher rental costs,"
Donnell concluded, "Social housing sectors to boost choice and ease the cost of living pressures on the UK’s renters.”
Industry reactions
Adam Jennings, head of lettings at Chestertons, said, “Overall, the UK’s rental market remains highly competitive as a growing population results in a continuous requirement for suitable housing. Whilst some areas of the UK may have witnessed an adjustment in supply or demand levels as well as rental inflation, the majority of cities and particularly London, still see a single property attract several tenant enquiries.
“Despite occasional market fluctuations, demand will likely always outweigh supply, which can result in a challenging property search for tenants. In fact, based on 2025 market trends, this summer may be the most competitive we have seen for many years.
"To stay ahead of the competition, tenants are advised to start their property search as early as possible but also establish what they might be prepared to compromise on whether that’s price, location or the size of the property.”
Tom Bill, head of UK residential research at Knight Frank, commented, “Rental value growth has cooled over the last year, but upward pressure remains thanks to tight supply.
"While some demand has transferred to the sales market as mortgage rates edge lower, a number of landlords have sold due to the tougher regulatory and tax landscape. As the Renters’ Rights Bill comes into force over the next 12 months, the upward pressure on rents could intensify if landlords see added risks around the repossession of their property and void periods.”
Greg Tsuman, Managing Director for Lettings, Martyn Gerrard Estate Agents, said, “It is a sad state of affairs when annual rent increases of 2.8% are being celebrated as a positive thing. The market has been in such a poor shape for so long that the rate of rent increases slowing is seen as a win. A 4-year low in rental increases is still a £32 increase each month for the average renter in London. We need to see rents falling soon because this situation is unsustainable.
“Unfortunately, these figures do not represent the end of an era for the rental market but a temporary reprieve. There is immense pressure in the rental market right now. With the Renters’ Rights Bill passing soon, landlords are continuing to exit the market to avoid becoming stuck. Thousands of tenants are receiving eviction notices, and they are competing for a shrinking pool of housing, which can only see rental prices continue upwards.”
Angharad Trueman, President of ARLA Propertymark, said, "It’s interesting to see that rent growth has slowed year on year. This is more than likely down to rent levels reaching their peak in many places across the UK, as they have been rising to unrealistic levels for years.
“From the outside looking in, it may look as though landlords and their greed are at the heart of this problem. However, this is not the case. A significant number of landlords face increased costs across the board, from continuous legislative hurdles, tax hikes, and mortgage increases, many are struggling to break even on their costs.
"Crucially, the fundamental pressures and reasons for these rises remain. The bombardment and penalisation of landlords are pushing many to leave the market altogether or prohibit new investors from entering, which is creating an ever-growing undersupply of privately rented homes against a backdrop of increasing demand from renters. It’s crucial that support is available and incentives are introduced for investment moving forward in order to make private rented housing more affordable in the long term.”
