"The good news is that the latest industry snapshot suggests more investors are taking out buy-to-let loans compared with last year, which should help to bring even more homes to the rental market"
- Colleen Babcock - Rightmove
Average asking rents for homes outside London have reached a new record of £1,365 per calendar month (pcm), according to the latest data. While rents continue to rise, the annual pace of growth is slowing.
In the capital, advertised rents climbed by 0.5% this quarter to £2,712 pcm, marking the 15th consecutive record high. Nationally, rents are now £417 more each month than five years ago, representing a 44% increase. Over the same period, average earnings rose by 36%.
Although rents remain high, growth has cooled since the peak activity in 2021 and 2022. The slowdown is linked to an improving supply and demand balance in the market.
Available rental listings are now 15% higher than this time last year. The North East saw the biggest increase, up 33%. However, overall stock is still 29% lower than pre-pandemic levels in 2019.
At the same time, tenant demand has dropped by 10% compared to last year. This shift means the average rental property now receives 11 enquiries, down from 16 last year, though still above the seven recorded in 2019.
New investment in the rental market is also helping to ease pressure. UK Finance reports a 17% year-on-year increase in buy-to-let loans, with a 28% rise in loans for new rental purchases specifically.
As supply improves, properties are taking longer to let. On average, a home is now marked let agreed on Rightmove after 25 days. This is up from 21 days in 2023 and 18 days in 2022.
Additionally, 24% of rental properties see a price reduction during marketing, the highest proportion since 2017.
“Despite another new record in average asking rents for tenants, the big picture is that yearly rent increases continue to slow, which is good news for tenants,” said Colleen Babcock, property expert at Rightmove. “Supply and demand are slowly rebalancing towards more normal levels, though we still have a way to go before we reach pre-2020 levels of available homes for tenants. The good news is that the latest industry snapshot suggests more investors are taking out buy-to-let loans compared with last year, which should help to bring even more homes to the rental market.”
Industry reaction
"Many landlords within the private rental market are grappling with substantial hikes in their overall costs, including increased taxes, unfavourable mortgage rates, and ongoing regulatory challenges," comments Megan Eighteen, President of ARLA Propertymark. "These factors are making property investment less appealing and potentially riskier. Consequently, this is exacerbating the disparity between supply and demand for housing, and we've seen a significant impact on rental prices, which vary regionally."
She added, "It is clear to see that many landlords may now be struggling to justify their current or future property investments, especially if costs and the number of regulations continue to rise. It is crucial for all governments across the UK to recognise the vital role the private rented sector plays in accommodating the nation's housing needs and provide urgent support to enhance the supply of homes while effectively lowering rent levels in the long term."
“The rental market has undergone a marked shift in 2025,” explained Alex Caddy, manager at Clarkes Estate and Letting Agency. “After several years of sharp rent inflation post-pandemic, tenants hit a ceiling by late 2024, leading to widespread price slowdowns. Competitively priced, well-presented properties continue to attract strong interest, echoing trends seen in the sales market. However, the market is now dealing with a much higher supply of rental homes, a complex reversal of previous trends. Some landlords have exited the sector over the past two years due to rising regulatory and financial pressures, but with the sales market slowing in some areas, a growing number of those properties have re-entered the rental market.
“Demand remains robust, particularly for quality one- and two-bedroom homes. Larger properties are moving more slowly, with some seeing longer void periods as tenants benefit from increased choice. A more acute challenge is emerging in the student sector. A reduction in university intake for 2025 has left many HMOs (houses in multiple occupation) unlet for the September start. Some landlords in this space are now pivoting to the general rental market, further swelling already high supply levels.”
“We’re seeing a shift in the rental market this quarter,” noted Andrew Ralph, managing director, lettings at LRG (Leaders Romans Group). “Stock levels are up, and demand remains strong but more measured, bringing us closer to a sustainable balance. Average rents are still rising year-on-year, but at a slower pace. Pricing correctly from the outset is key, and being quick to adjust price in line with market response helps avoid unnecessary void periods.
“Tenant affordability is a key focus. Matching the right tenants to the right homes is becoming more important than ever. The best outcomes, for landlords and tenants alike, are coming where there’s transparency, realistic pricing, and a shared understanding of future expectations.
“While some landlords are choosing to exit, the volume remains broadly in line with recent years. What’s more notable is the rise of a new generation of professional, tech-savvy investors entering the market, often with a long-term focus on capital growth. Many portfolio landlords remain active, particularly in areas with strong yields. The market is adapting, and while the challenges are real, the opportunities are still there for those taking a strategic view.”
