New data shows shift from renting to buying
The UK’s rental market is experiencing a slowdown, with demand for rental properties dropping sharply, according to the latest Hamptons Monthly Lettings Index for May 2025. The report reveals a notable decrease in tenant registrations and a corresponding easing in rental growth across Great Britain.
The data indicates a 17% reduction in new tenant registrations in May compared to the same period last year, with figures now standing 28% below 2019 levels. This marks the 12th consecutive month of year-on-year decline in tenant demand. The weakening demand is widespread, with 63% of lettings branches reporting fewer new tenants.
A key factor contributing to this shift is the changing landscape for first-time buyers, the report noted. As mortgage rates have fallen from their 2022 and 2023 peaks, the monthly cost of homeownership has become more competitive than renting for many. Currently, there are 1.5 tenants registering for every prospective first-time buyer, a ratio that has nearly halved since mortgage rates began their descent. For the first time in a decade, both London and Scotland have seen more first-time buyers actively seeking to purchase than tenants looking to rent.
This reduced demand, coupled with a slight increase in available rental properties—up 5% year-on-year in May—has led to a moderation in rental price inflation. The average rent on a newly let property in Great Britain rose by 1.5% in the 12 months leading up to May 2025, reaching £1,366 per month. This is a substantial drop from the 5.1% annual increase recorded in May 2024, bringing the pace of growth back to levels last seen in 2013.
Despite the overall deceleration, rental growth on renewed contracts continues to outpace new lets. Tenants choosing to extend their existing agreements saw rents rise by an average of 3.7% to £1,267 per month, marking the twentieth consecutive month where renewals have seen faster growth.
“Falling interest rates have reduced the pace of rental growth. Landlords rolling off short-term fixed-rate mortgages are now seeing their monthly payments fall, reducing the need to pass on further costs to tenants,” said Aneisha Beveridge, head of research at Hamptons, adding that while the era of rapid rental growth appears to be behind us, “rental growth is unlikely to cool much further.”
What are your thoughts on the recent findings? Share your insights below.
