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The UK Rental Market: Cooling, But Still Moving

The UK rental market is active again though the heat has cooled. Rents are still on the rise, but growth has slowed to its most modest pace in years. At the same time, rental supply is starting to recover. For landlords, this signals a shift: while demand remains high, margins are tighter, tenants expect more, and the days of simply listing a property and waiting are over.

Below shows the data from previous portfolio's:

Market Snapshot

• Average UK rent: £1,287 per month

• Annual growth: 2.8% year-on-year the slowest since July 2021

• Outlook: Rent increases of 3-4% forecast for 2025

What’s Driving the Slowdown?

1. Mortgage Rate Stability
Lower mortgage costs, especially for first-time buyers have reduced pressure on the top end of the rental market.

2. Slight Drop in Demand
Tenant enquiries are down 16%, though competition is still 60% above pre-COVID levels.

3. Supply Picking Up (Slowly)
Available rental stock is up 17% year-on-year, but still 20% below 2019 levels.

Regional Trends

• North East: Leading rent growth at +5.2%

• Yorkshire & Humber: Weakest growth at +1.1%

• London: Modest +1.5% increase; some inner boroughs saw declines

• Commuter towns: Strong performers like Wigan, Carlisle, and Chester, with +8–9% growth

Regional Average Rents:

Key Insights for Landlords & Investors

• Margin pressure continues – Costs remain high, squeezing returns

• Consider smaller markets – Commuter areas offer better ROI opportunities

• Affordability matters – Middle- and lower-income tenants are stretched, making tenant retention and property quality more important than ever

Looking Ahead

• Rental growth expected to stay modest: 3–4% projected for 2025

• More first-time buyers may ease demand at the top end of the rental market

• Policy changes looming: Rental reform and energy efficiency (EPC) updates could tighten supply even further