What is happening to the rental market in 2025?


Rents Near Record Highs but Growth Is Cooling

Average advertised rents outside London hit a record £1,349 in early 2025 – 4.5% higher than last year. London reached ~£2,700. However, growth has slowed, with just 2.8% annual increases in Q1 2025. The rental market is normalising after a 21% jump over the past three years.

Affordability Stretched as Renters Spend More Income on Housing

Renters in England spend about 34% of their gross income on rent – above the rent burdened 30% threshold. London and other urban areas see even higher rates, despite income growth keeping pace in many regions.

Tenant Demand Remains High but Shows Signs of Easing

Demand is 60% above pre-COVID levels, but has eased due to improved mortgage access and lower net migration. Still, competition remains high with 10–12 enquiries per listing, especially for affordable properties.

Rental Supply Still Constrained Despite Recent Improvement

Rental supply has improved (~15% YoY increase in listings) but remains 20% below pre-pandemic levels. Many small landlords are selling up while larger investors are entering. Rental churn has improved inventory but not fully balanced the market yet.

Landlord Challenges: Rising Costs, New Laws, and Portfolio Shifts

  • 31% of landlords plan to reduce portfolios; 16% to exit entirely.
  • Rising mortgage costs and end of tax relief squeeze profits.
  • Upcoming Renters’ Reform Bill and EPC mandates cause uncertainty.
  • 62% say abolishing Section 21 will drive more exits.

Build-to-Rent Developments: Mitigating Supply Crunch?

127,000+ build-to-rent units exist, with over 17,000 completed last year. Sector growing rapidly outside London. However, construction is slowing due to costs and safety regulations. Pipeline shrank 14% YoY, raising concerns over future supply.

Outlook for Landlords and Investors in 2025

Rent increases to moderate to ~3–4% this year. Supply improving, but affordability remains tight. Investors may find opportunities in affordable regions. Regulatory risks and high borrowing costs persist, making professional management and strategic planning essential.

Quick Summary

  • Average UK rent: £1,287/month (Q1 2025)
  • London rent: ~£2,700/month
  • Rent growth slowing: 2.8% YoY vs 6.4% in 2023
  • Landlord exits: 31% plan to downsize portfolios
  • Build-to-rent stock: 127,000 homes
  • Tenant demand: Still high but cooling


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