The UK rental boom is over, claims Zoopla.
Average rents for new lets increased by 2.8% in the 12 months to April 2025, less than half the rate of rental growth of a year ago (6.4%) and the lowest rate of growth in almost four years (since July 2021). The average monthly rent now stands at £1,287 pcm, up £35 over the last year.
Rental growth has slowed across all regions and countries of the UK over the last year, particularly in Yorkshire and the Humber, where rents have slowed to 1.1%, down from 6.4% in 2024. This is due to slower rental growth in key university cities, such as Sheffield (1.9%), Bradford (1.4%) and Leeds (-1.5%), dragging the overall rate lower. In the North East, rental growth has slowed to 5.2%, down from 9.4% in 2024.
In Scotland, the rate of growth has slowed rapidly from 9.1 to 2.4% due to affordability pressures and the removal of rent controls which limited how much rents can be increased within tenancies. In Dundee, rental growth has slowed to -2.1%, down from 5.8% in 2024.
In London, rents are posting modest falls in inner London areas including NW London (-0.2%) and WC London (-0.6%). Overall, rental growth stands at 1.5%, with average rents of £2,175 pcm.
Rents have continued to increase quickly in more affordable areas adjacent to large cities such as Wigan (8.8%), Carlisle (8.8%) and Chester (8.2%). The number of postal areas where rents have risen at over 8% a year has fallen from 52 a year ago to just five today.
The sales and rental markets have diverged in recent years, particularly over the last three years, with rental inflation outpacing the growth in house prices.
Average UK rents for new tenancies are 21% higher since 2022, compared to just 4% for house prices. The average monthly rent has increased by £219 over this time, broadly the same as the increase in average mortgage repayments. Average annual UK rents have increased by £2,650 over the last three years, from £12,800 to £15,450.
The slowdown in the rate of rental growth is a result of weaker rental demand and growing affordability pressures, rather than an increase in supply.
Zoopla data shows rental demand is 16% lower over the last year, but this remains more than 60% above pre-pandemic levels. Lower migration into the UK for work and study is a key factor with a 50% decline in long-term net migration in 2024.
Stability in mortgage rates and improved access to mortgage finance for first-time-buyers, most of whom are renters, is also a factor behind the moderation in levels of rental demand. Recent changes to how banks assess affordability will make it easier for renters on higher incomes to access home ownership, easing demand at the upper end of the rental market.
Despite weaker demand, renters are still facing a limited supply of homes for rent which is 20% lower than pre-pandemic levels, despite being 17% higher than a year ago. Lower levels of new investment by private and corporate landlords is limiting growth in the private rental market. Looking to the remainder of 2025, UK rents remain on track to increase by 3 to 4% over the rest of the year.
Richard Donnell, executive director of research at Zoopla, says:“Rents rising at their lowest level for four years will be welcome news for renters across the country. The average annual cost of renting is over £2,500 a year higher than three years ago, the same as the increase in average mortgage repayments for home owners.
“While demand for rented homes has been cooling, it remains well above pre-pandemic levels sustaining continued competition for rented homes and a steady upward pressure on rents. The pressures are particularly acute for lower to middle incomes with little hope of buying a home and where moving home can trigger much higher rental costs.
“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.”
This article is taken from Landlord Today