Slower growth mask a rental market still under severe strain
UK private rents ended 2025 growing at their slowest pace in more than three years, but the easing in headline inflation has done little to relieve pressure across the private rented sector.
Average UK monthly private rents rose by 4.0% in the 12 months to December 2025, taking the typical rent to £1,368 on a provisional basis. That is down from annual growth of 4.4% in November and marks the lowest rent inflation rate since May 2022, according to the latest figures from the Office for National Statistics (ONS).
While the slowdown points to a cooling in rental growth after a prolonged surge, rents remain historically high and affordability stretched for many households.
Rents easing, but not cheap
The national picture masks wide regional and local variation, as well as a still-elevated cost base.
In England, the average monthly rent climbed to £1,424 in December, 3.9% higher than a year earlier. Wales saw faster growth, with rents up 5.7% to £822. In Scotland, where the market has cooled after sharp rises earlier in the cycle, the average rent reached £1,018, up 2.8% year-on-year. In Northern Ireland, average rents stood at £873 in October 2025, also 5.7% higher than a year before.
Within England, contrasts remain stark. The North East recorded the fastest annual rent inflation at 7.9% in the year to December 2025, while London saw the slowest growth at just 2.1%. Despite that slowdown, London remains by far the most expensive region in cash terms, with an average rent of £2,268 in December, compared with £762 in the North East, the cheapest English region.
At a local level, affordability gaps are even more pronounced. Average monthly rent in Kensington and Chelsea reached £3,651 in December, more than six times higher than in Dumfries and Galloway, Scotland, where the average was £543. Excluding London, Oxford was the most expensive local area, with an average rent of £1,913.
By property type, detached homes commanded the highest rents at £1,562 per month, while flats and maisonettes averaged £1,336. Homes with four or more bedrooms attracted average rents of £2,039, compared with £1,109 for one-bedroom properties, highlighting the premium faced by larger households and those needing more space.
Structural pressure beneath softer rental inflation
Industry figures warn that the slowdown in rent growth should not be mistaken for a return to balance in the private rented sector.
Alex Upton, Managing Director, Specialist Mortgages & Bridging Finance at Hampshire Trust Bank, said the latest figures must be viewed against persistent supply-demand imbalance and growing pressure on landlords.
“While the latest ONS data shows a slowdown in rental growth, the underlying pressure has not gone away. Demand remains strong, supply is still tight, and that imbalance continues to feed through into pricing.
Upton said landlords are increasingly reassessing their long-term strategies as regulatory, tax and cost pressures intensify.
“Landlords are facing a growing list of considerations. The Renters’ Rights Act, combined with tax and cost pressures confirmed in the Budget, including changes to mortgage interest relief and dividend taxation, is prompting many to take a more strategic view of their portfolios. Some are moving into limited company structures, others are rebalancing into semi-commercial or mixed-use assets, and many are reshaping how their funding aligns with long-term plans.
Speaking to Mortgage Introducer, Upton warned that the slowdown in headline figures does little to ease the longer-term risks facing the sector:
“Rental growth may have eased, but the structural pressures driving the market have not changed. Tenant demand remains high, new rental supply is limited, and the regulatory and tax environment is becoming more complex. Without meaningful support for landlords, we risk seeing more exits, reduced availability and sharper increases in rents over the medium term.
She added that this environment is driving a shift in how landlords approach funding.
“Landlords are not just refinancing, they are restructuring. That could involve raising capital across multiple properties, combining short- and long-term facilities, or adapting finance to support refurbishment and compliance work. The ability to shape funding around the investor’s next move, not just the current asset, is becoming a real differentiator.
“We are seeing growing demand for lenders who can deliver flexibility, certainty and practical structuring, not just headline pricing. Brokers are central to that process, helping clients align their portfolios with a tougher operating environment. In that context, specialist lending is not a niche. It is a vital part of keeping the rental market functional, particularly when confidence is being tested from all sides.”
Upton said the longer-term resilience of the rental market depends on maintaining investment confidence and supply.
“Tenants rely on good-quality homes, but that supply depends on investors being able to operate with clarity and stability. If the combined effect of regulation, taxation and cost becomes too great, we risk seeing more landlords exit and availability fall further.
“Raising standards is essential. But if we want a rental market that remains accessible and resilient, we need a regulatory and funding environment that gives landlords and brokers the confidence to stay invested.”
Slower growth, sustained strain
While rent inflation has eased from its recent peak, the data underline a market where costs remain high, regional disparities entrenched, and supply pressures unresolved.
For tenants, slower rent growth offers limited relief after several years of sharp increases. For landlords, regulatory change, higher taxes and financing costs continue to shape investment decisions — with long-term implications for the availability and affordability of rented homes.
