The UK rental market continues to face significant challenges as demand from tenants remains strong while the number of properties available to rent shows little sign of improving. According to the latest housing market survey from the Royal Institution of Chartered Surveyors (RICS), the lettings sector remains under considerable pressure, with the imbalance between supply and demand continuing to drive rental costs higher.
RICS’ latest market snapshot reveals that tenant demand increased during May, with a net balance of 14% of survey respondents reporting a rise in enquiries from prospective renters. This suggests that despite affordability concerns and wider economic uncertainty, demand for rental accommodation remains resilient across much of the country.
At the same time, the flow of new rental properties entering the market remains weak. Landlord instructions, which measure the number of property owners bringing homes to the rental market, recorded a net balance of -28%. This indicates that significantly more survey participants are seeing a decline rather than an increase in rental stock.
The ongoing shortage of available properties is continuing to place upward pressure on rents. Expectations for rental growth strengthened again during the latest survey period, with a net balance of 36% of respondents predicting further rent increases over the coming months. This marks the strongest reading recorded since May last year and highlights the continued strain facing tenants searching for affordable accommodation.
The lack of available homes remains one of the biggest issues affecting the private rented sector. While demand has remained relatively healthy, investment in new rental housing has failed to keep pace, limiting options for tenants and contributing to higher costs in many areas.
The RICS report also provides an update on conditions within the housing sales market, where activity remains subdued. Agreed sales continued to show negative momentum, with a net balance of -37%. Although this means more surveyors are still reporting falling sales rather than rising transactions, the figure remained unchanged from the previous month, suggesting the downturn may be beginning to stabilise.
While the pace of decline has not worsened, market activity remains sluggish. Buyers and sellers continue to face uncertainty surrounding interest rates, affordability and the wider economic outlook, all of which are affecting confidence and decision-making.
One area of concern highlighted by the survey is the increasing length of time it takes for property transactions to complete. The average period from a property being listed for sale to reaching completion has now risen to 21.5 weeks. This is the longest timeframe recorded since RICS began collecting this data in 2017.
House prices also remain under pressure. The headline net balance for price movements stood at -35% for the second consecutive month, indicating that more surveyors continue to report falling prices than rising ones.
Regional differences remain evident across the country. Respondents in the South East and East Anglia reported particularly strong downward pressure on property values, reflecting affordability constraints and weaker buyer demand. In contrast, Northern Ireland continues to show more positive momentum, with survey participants reporting continued growth in house prices.
Looking ahead, sentiment across the property market remains cautious. Expectations for house prices over the next three months remain firmly negative, with a net balance of -45% of respondents anticipating further declines in the short term.
However, there are some signs of longer-term optimism. When asked about the outlook for the next 12 months, respondents reported a slightly positive net balance of 6%, suggesting that some property professionals believe conditions could gradually improve once economic uncertainty begins to ease.
According to Tarrant Parsons, Head of Market Research and Analysis at RICS, several key indicators suggest that the recent slowdown may be stabilising. However, he cautioned that the market remains in negative territory overall, making it too early to describe current conditions as a genuine recovery.
Parsons noted that the fall in Consumer Price Index inflation to 2.8% during April provided some welcome relief. Nevertheless, concerns remain over future inflationary pressures, particularly as higher energy costs continue to feed through into the wider economy.
The Bank of England has also indicated that inflation risks remain present, meaning the possibility of future interest rate increases cannot be ruled out entirely. Until there is greater certainty around the direction of inflation and borrowing costs, confidence across both the sales and rental markets is likely to remain fragile.
For renters, the picture remains particularly challenging. Strong demand combined with limited supply continues to create a competitive market, pushing rents higher and reducing choice. Unless there is a significant increase in the number of homes available to rent, affordability pressures are likely to remain a key concern throughout the remainder of the year.
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