Falling demand signals end of post-pandemic boom
The UK’s rental market has entered a slowdown, with average rents for new lettings rising by just 2.8% in the 12 months to April 2025, according to the latest Rental Market Report from property portal Zoopla.
This marks the weakest annual increase in nearly four years, and is less than half the growth rate seen a year earlier. The average monthly rent now stands at £1,287, up £35 from April 2024.
All regions and nations in the UK have recorded weaker rental growth. Yorkshire and the Humber saw the sharpest decline, with growth easing to 1.1%, compared to 6.4% last year. Cities such as Leeds (-1.5%), Bradford (1.4%), and Sheffield (1.9%) were also key contributors to this drop.
In Scotland, annual rental growth dropped from 9.1% to 2.4% following the end of rent control measures and ongoing affordability constraints. Rents in Dundee declined by 2.1%.
In London, average rents increased 1.5% year-on-year to £2,175. However, some central areas reported marginal declines, including NW London (-0.2%) and WC London (-0.6%).
Growth remained stronger in lower-cost towns near major cities, such as Wigan (8.8%), Carlisle (8.8%) and Chester (8.2%). Yet the number of areas with rental growth exceeding 8% has plummeted from 52 to just five over the past year.
Over the past three years, rent increases have significantly outstripped house price growth. Since 2022, average UK rents for new tenancies have risen by 21%, while house prices have only increased by 4%. This has translated to a £219 rise in average monthly rent, similar to the jump in average mortgage payments. Annual rental costs have climbed from £12,800 to £15,450 during this period.
Zoopla attributes the slowdown in rental growth primarily to affordability challenges and reduced demand, not an increase in rental supply. While rental demand has declined 16% in the past year, it remains over 60% above pre-pandemic levels. A fall in net migration, particularly for work and education, contributed to the reduced demand. First-time buyer activity has also picked up due to stable mortgage rates and looser lending criteria, easing pressure on the upper end of the rental sector.
Despite falling demand, the supply of rental homes is still constrained — 20% below pre-pandemic levels, though up 17% year-on-year. Reduced investment by landlords continues to limit availability. Zoopla forecasts rental growth of 3% to 4% over the remainder of 2025.
“Rents rising at their lowest level for four years will be welcome news for renters across the country,” commented Richard Donnell (pictured centre), executive director of research at Zoopla. “The rental market desperately needs increased investment in rental supply across both the private and social housing sectors to boost choice and ease the cost-of-living pressures on the UK’s renters.”
Angharad Trueman (pictured left), president of ARLA Propertymark, said the slowdown in rental growth can be attributed to rent levels reaching unsustainable highs in previous years. She added that landlords are facing increased costs across the board, and called for more support and incentives to encourage investment in the sector.
For Louisa Sedgwick (pictured right), managing director of mortgages at Paragon Bank, “it’s positive that supply pressures in the rental market ease over the period and rent inflation has tempered.”
“The long-term structural rental market supply demand imbalance will only deteriorate unless action is taken to boost the number of rental homes available, particularly as population growth and household formation is forecast to accelerate over the next few years,” she pointed out.
“It is important that the economic and regulatory environment is one that provides landlords with the confidence to not only remain in the sector, but to grow their portfolios and provide much-needed new rental stock.”
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