UK rents are climbing at their fastest pace in more than a year and are on course to accelerate further, as a drop in rental supply combines with rising mortgage rates to tighten conditions across much of the country, according to Zoopla's latest rental market report.
Rents rose 2.6% in the 12 months to July 2026, up from a low of 1.6% in February. The average rent now stands at £1,340 a month. With mortgage rates remaining elevated and new investment in rental stock still muted, Zoopla expects growth to reach between 4% and 5% by the end of the year.
Supply falls for first time in three years
The number of homes available to rent started falling in May 2026, ending a three-year recovery in rental supply that had helped slow rent rises over 2024 and 2025. There are now 3% fewer homes for rent across the UK than a year ago, with supply of new rental homes down 6% in August alone. Areas with the biggest declines in available stock are typically recording the fastest acceleration in rents.
At the same time, demand has been building. The rise in mortgage rates since the start of the year has made it harder for first-time buyers to purchase, keeping more people in rented accommodation for longer. The combined effect has pushed the number of enquiries per rental listing to 5.3, the highest level in almost two years, and 6% above the same point in 2025.
Zoopla's analysis points to supply scarcity, rather than regulation, as the primary driver. Scotland is seeing the same pattern of fewer homes to rent and faster rental growth despite the Renters Rights Act not applying there, which Zoopla says undermines the case that legislation is the main cause of current rent increases.
London faces the sharpest squeeze
Rental growth in London jumped to 2.9%, up from 1.7% a year ago, with both supply and demand tightening simultaneously. Higher mortgage rates have hit would-be buyers in the capital much harder than in the rest of the country.
Zoopla's data shows the average London buyer now needs an extra £35,500 in deposit to keep mortgage payments at January levels, compared with £18,200 nationally, based on a 75% loan-to-value mortgage on a 27-year term, with five-year fixed rates having moved from 4% to 4.8%.
The pressure is most acute across inner London, covering the SE, E, N, NW, SW, W, EC and WC postal areas. Demand there is running above last year's level while the number of homes for rent has fallen 13%, pushing rental growth in those areas to between 3% and 4%.
Affordable markets seeing fastest growth
The two-speed dynamic that has defined the rental sector since 2022 persists. Areas where average rents sit below £750 per month are seeing growth of around 5.4%, roughly double the national rate. Some of the sharpest increases are concentrated in smaller, more affordable markets with fewer landlords and little new investment, largely in Scotland and northern England.
Dumfries (+11.3%) and Carlisle (+8.8%) lead among postal areas with the fastest rent increases. Zoopla notes that many of these markets have weaker demand than last year, with rents rising because homes to rent are becoming scarcer rather than because more tenants are competing for them.
At the other end of the spectrum, Wales has seen the sharpest slowdown in rental growth, linked to a 7% increase in available homes for rent.
"The rental market is starting to tighten again after three years in which the supply of homes for rent has steadily improved and rental growth slowed, easing the pressure on renters," said Richard Donnell, executive director at Zoopla. "Our latest report shows how sensitive the rental market is to even modest changes in how many homes are available for rent.
"Higher mortgage rates are not just impacting the sales market; they are keeping more would-be first-time buyers in rented homes for longer, reducing available supply just as the seasonal upturn in demand gets into full swing. This is pushing rents higher again, mainly in regions where the availability of homes for rent has declined the most, although affordability remains an important constraint on how far rents can rise.
"The upward pressure on rents is greatest in London, where higher mortgage rates have had the biggest impact on home buyers, and in more affordable rental markets where renters have greater capacity to absorb increases.
"Low levels of new investment by landlords and renters renting for longer mean we expect UK rents to increase by 4–5 per cent by the end of the year. Growing the number of homes for rent through increased investment is the most sustainable route to boosting choice for renters and ensuring stability in rent levels over the long run."
Allison Thompson, chief lettings officer at LRG, said, "These latest figures reflect the strong level of tenant demand we are seeing, but the real interest lies behind the headline figures, specifically regarding the relationship between the sales and rental markets. Higher mortgage costs mean that some tenants are renting for longer than perhaps planned, while a previous dip in landlord investment is limiting replacement stock.
"Yet in London and the South East, falling property prices substantially improve yields. Not surprisingly, we are seeing established investors looking to expand. Clearly serious landlords recognise this unusual set of circumstances as a rare opportunity which they are keen to capitalise on."
Tom Bill, head of UK residential research at Knight Frank, commented, “Rising mortgage rates are exacerbating the imbalance between low supply and high demand in the lettings market as more tenants stay put. That follows years of tightening supply as landlords left the sector due to a proliferation of red tape and taxes.
"For those who have stayed, the Renters’ Rights Act has aggravated the situation further, with some landlords setting asking rents higher to compensate for the increased risks they face around void periods, rent collection and regaining possession of their property.”
Nathan Emerson, CEO at Propertymark, said, “The latest Zoopla data reinforces the importance of increasing the supply of good-quality homes for rent. As availability falls, competition increases, and affordability pressures grow for tenants.
“Higher mortgage costs are also keeping some would-be buyers renting for longer, while landlords continue to face significant borrowing, operating and regulatory costs that can make investment more challenging.
“A sustainable private rented sector requires the right conditions for responsible landlords to invest for the long term. Increasing supply must remain a priority if we are to give tenants greater choice, improve affordability and create a more stable rental market."
