The surge in rental prices appears to have come to an end, according to the latest figures from Zoopla.
Data from the property platform shows that average rents for new lettings have risen by 2.8 per cent over the past year — a notable drop from the 6.4 per cent rise recorded during the same period last year. This marks the slowest rate of rental inflation since July 2021.
Currently, the average rent for a new tenancy in the UK stands at £1,287 per month. That’s a modest £35 increase compared to a year ago.
These figures suggest the rental market is beginning to cool after a sharp three-year period of growth, during which rents rose at a pace five times faster than house prices.
Since 2022, average rents on new agreements have climbed by 21 per cent, whereas property prices have only increased by around 4 per cent during the same period.
In monetary terms, this rent growth equates to an average monthly increase of £219 — a rise that closely mirrors the jump in typical mortgage payments.
Over the past three years, annual rents have gone up by £2,650, moving from £12,800 to approximately £15,450 a year.
Why are rent increases are slowing?
According to Zoopla, the recent slowdown in rental price growth is being driven by a drop in demand and increasing affordability pressures, rather than any meaningful boost in the number of homes available.
Over the past year, rental demand has fallen by 16 per cent. However, it still remains over 60 per cent higher than levels seen before the pandemic began.
One major reason for this decline in demand is a reduction in long-term migration. Zoopla notes that net migration for work and study fell by half last year, significantly influencing rental activity.
In addition, greater stability in mortgage rates and improved access to home loans has made it easier for many renters — particularly first-time buyers — to step onto the property ladder. These changes have helped to ease some of the pressure at the higher end of the rental market.
Recent updates to mortgage affordability assessments are also expected to help renters on higher incomes transition into home ownership more easily, lessening their dependence on the rental sector.
There has also been a modest improvement in supply. The number of homes available to rent has increased by 17 per cent compared to a year ago. However, availability still remains 20 per cent lower than before the pandemic, leaving the market tight.
Zoopla points out that limited investment from both private landlords and corporate property owners is restricting the growth of the private rental sector.
Looking ahead to the remainder of 2025, Zoopla expects rents to rise by a further 3 to 4 per cent.
Richard Donnell of Zoopla commented that the current rent increase — the lowest in four years — should come as welcome news for tenants across the country. However, he warned that demand for rented accommodation still outpaces supply, maintaining strong competition and continued upward pressure on prices.
He highlighted that the situation is particularly difficult for those on lower to middle incomes, who may be unable to afford to buy and face large rent hikes when moving home.
Donnell emphasised the urgent need for increased investment in rental housing across both the private and social sectors to ease living costs and provide more choice for renters in the UK.
What’s happening across the country?Â
Rental growth has slowed across every region of the UK over the past year, with some areas seeing a more pronounced decline than others. Yorkshire and the Humber has experienced the most significant drop, where annual rent increases have fallen to just 1.1 per cent — a sharp fall from 6.4 per cent recorded in 2024.
According to Zoopla, this slowdown is largely due to weaker rental growth in major university cities such as Sheffield, Bradford, and Leeds, which has dragged down the regional average.
In the North East, the rate of rental growth has also dropped noticeably, falling to 5.2 per cent from 9.4 per cent the previous year.
Scotland has seen an even steeper decline in rental price growth, with the rate falling from 9.1 per cent to just 2.4 per cent. This has been linked to affordability constraints and the lifting of rent controls, which had previously restricted how much landlords could increase rents within existing tenancies.
In Dundee, rents have actually gone into reverse, now 2.1 per cent lower than they were a year ago. At the same point last year, rents in the city were up by 5.8 per cent.
London’s rental market has also seen minor decreases in some central locations. Inner areas like North West London and Western Central London have recorded year-on-year declines of 0.2 per cent and 0.6 per cent respectively.
By contrast, rental prices continue to rise in more affordable towns located just outside major cities. Wigan and Carlisle have each seen rents jump by 8.8 per cent, while Chester has recorded an 8.2 per cent rise.
Zoopla’s data shows that the number of UK postcodes experiencing annual rental growth of more than 8 per cent has significantly reduced — falling from 52 last year to just five today.
Despite the general cooling of rental inflation, many in the property sector believe that upward pressure on rents is far from over, especially if landlords continue to leave the market.
Tom Bill, head of UK residential research at Knight Frank, noted that while rental growth has eased, the market remains tight. He explained that although some tenants have transitioned into home ownership due to slightly lower mortgage rates, others have been affected by landlords exiting the sector due to rising taxes and stricter regulations.
He warned that the upcoming implementation of the Renters’ Rights Bill could make matters worse. As it becomes harder for landlords to reclaim possession of their properties, concerns around rental voids may increase, possibly driving more landlords to sell up — further reducing available rental homes.
Greg Tsuman, managing director of lettings at Martyn Gerrard Estate Agents, echoed this sentiment. He cautioned that the current figures may offer only temporary relief for tenants. With many landlords opting to leave the market to avoid new regulatory burdens, he said the supply of rental homes is continuing to shrink.
As a result, thousands of tenants are facing eviction and are now competing for a limited and increasingly expensive pool of housing — a trend likely to push rental prices up once again.
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