"It has taken almost two years for rental growth to fall from double digits to 1.5%, bringing it close to the long-term average. This suggests the period of rapid rental growth is over for now."
- Aneisha Beveridge - Hamptons
Tenant registrations at lettings branches across Great Britain dropped by 17% in May compared to the same month last year, and current levels remain 28% below those seen in 2019, according to the latest market analysis from Hamptons.
In 2025, an average of 1.5 tenants registered to find rental properties for every prospective first-time buyer. This ratio had nearly halved since mortgage rates peaked in 2022 and 2023 when many were priced out of the sales market.
For the first time in at least a decade, both London and Scotland have recorded more first-time buyers looking to purchase than tenants seeking rental properties.
Rental growth slows
Hamptons analysis shows that weaker demand has slowed rental growth. The average rent on newly let properties in Great Britain increased by 1.5% in the 12 months to May 2025, compared with a 5.1% rise during the same period last year.
Falling mortgage rates have made buying more affordable for first-time buyers with small deposits, pushing monthly costs below those of renting. Those with deposits of at least 10% are now generally better off buying than renting.
This shift has particularly affected tenant demand in more affluent areas, where demand has fallen 50% more than in less affluent locations.
Declining numbers
Hamptons says that the decline in tenant numbers is widespread, with 63% of branches reporting fewer tenant registrations in May 2025 than the previous year. This marks the twelfth consecutive month of year-on-year falls in tenant demand.
In 2017, there were 5.9 tenants registering to rent for every first-time buyer looking to purchase. Since then, the ratio has steadily declined, reflecting a rise in first-time buyers.
In London, first-time buyers accounted for 50.3% of new buyer registrations this year, an increase of 2% compared to last year, despite an overall drop in demand from other buyer groups.
Rising supply levels
At the end of May, rental supply was 5% higher than at the same point in 2024. The number of homes available to rent has risen each month since August 2022, despite a decrease in new buy-to-let purchases. This increase reflects properties taking longer to let due to weaker demand. However, recent supply growth has slowed to low single-digit percentages.
The combination of slightly higher supply and reduced demand has tempered rental growth. Average rents on newly let properties reached £1,366 per month, rising 1.5% over the past year, a rate close to the 1.6% average seen in 2013. This compares with the 5.1% annual increase recorded in May 2024, meaning growth has dropped by nearly two-thirds.
Rents
For the twentieth month in a row, rent rises on renewals have outpaced those for new lets. Tenants renewing leases saw rents increase by 3.7% to £1,267 per month in May, paying £99 less than tenants moving into new homes.
Rental growth remains strongest for new tenants in the North and Midlands, while rents in London fell 0.5% year-on-year, pulling the national growth rate down by 1%. London rents are now below their June 2023 level.
“Following trends similar to the years after the last economic downturn, falling interest rates have slowed rental growth," explained Hamptons' head of research, Aneisha Beveridge. "Landlords moving off short-term fixed-rate mortgages are seeing lower monthly costs, reducing the pressure to raise rents further.
“At the same time, lower mortgage rates have shifted the balance for tenants considering buying. Although rates remain higher than pre-Covid levels, three years of above-inflation rental growth mean buying is now cheaper than renting for most. This has increased first-time buyer numbers and dampened rental demand.
She added, “It has taken almost two years for rental growth to fall from double digits to 1.5%, bringing it close to the long-term average. This suggests the period of rapid rental growth is over for now.
“That said, rental growth is unlikely to slow much further. While falling interest rates should ease rent increases over the coming years, landlords will likely continue to factor in political risk. As landlords gain clarity on the Renters’ Rights Bill, the outcome will shape future investment appetite.”
