"The affordability of renting remains a key constraint on the pace of future rental inflation, and we expect rents to be three per cent higher by the end of the year at an average of £1,320 a month"
- Richard Donnell - Zoopla
The UK rental market is showing signs of cooling, with the latest data from Zoopla revealing that average rents are now just 2.4% higher than a year ago. This represents the slowest annual increase in four years and is less than half the rate recorded 12 months ago. The average monthly rent currently stands at £1,300, up £30 over the past year.
Over the last five years, rents have risen by almost £80 per week, equating to an extra £4,100 a year for renters. This has created affordability challenges, which have contributed to the recent slowdown in rental growth. At a local level, rents are falling in some cities, including Bristol (-0.5%) and Leeds (-0.6%).
Supply and demand shifts
The supply of rental homes has increased by 19% over the last year, while demand is 24% lower than a year ago. Lower migration levels and improved mortgage availability for first-time buyers are significant factors behind this change. More first-time buyers are moving into homeownership, freeing up rental properties and increasing market choice.
Regions such as the South West and East Midlands have seen particularly strong growth in supply, up 36% and 31% respectively. Homeowners struggling to sell their properties are also choosing to rent them out, further boosting available stock. London remains an exception, with rental supply rising only slightly.
High deposit requirements (£187,000 in London vs £29,000 in the North East) and a larger share of landlords still seeking to sell (31%) mean the capital’s market remains tighter than other regions.
Letting agents are seeing 24% fewer enquiries from prospective tenants compared to a year ago. Changes to mortgage affordability rules in early 2025 have increased first-time buyer borrowing capacity by 20%, resulting in a 30% rise in first-time buyer mortgages over the past year.
Affordability impacts
The cumulative impact of rising rents over the past five years has constrained rental growth. Many private renters are on below-average incomes, and nearly a third rely on housing benefit, where the allowance has not kept pace with rental increases. Across the UK, annual rental growth ranges from below 2% in London, Scotland, and Yorkshire and Humberside, to 4.6% in the North East.
Outlook for the remainder of 2025
After several years of intense competition for rental properties, the market is beginning to balance. More choice and slower growth provide tenants with breathing space, although high homeownership costs continue to trap some households in renting, maintaining demand above pre-pandemic levels. Rental growth is projected to reach 3% over the remainder of 2025.
Richard Donnell, executive director at Zoopla, said, “Rental market conditions are starting to normalise, which will be very welcome news to renters. Lower migration and better mortgage availability for first-time buyers are easing the scale of the competition for rented homes. There is also more choice for renters with more homes for rent as landlords start to buy homes once again, and some owners who can’t find a buyer are listing their homes for rent.
“The affordability of renting remains a key constraint on the pace of future rental inflation, and we expect rents to be three per cent higher by the end of the year at an average of £1,320 a month.”
Peter Maskell, managing director of Brock Taylor in Sussex, added, “The South East rental market is rebalancing, with more homes available and rent growth easing, giving tenants more choice than we’ve seen in recent years. For landlords, success now hinges on being realistic with pricing and ensuring properties are both well-presented and well-located, as these are the homes that continue to attract strong demand even as the market steadies.”
