Market Overview
As of mid-2025, the UK rental market is experiencing a cooling in rental price inflation, with average rents outside London at £1,349 per month, marking a 0.6% quarterly increase and a 4.5% annual rise.* In London, rents have reached £2,698 per month, a 0.1% quarterly increase and a 2.5% annual rise.* This slowdown in rent growth is attributed to a slight increase in rental supply and a decrease in tenant demand.
Supply and Demand Dynamics
The number of new rental properties coming onto the market in March 2025 was 11%* higher than the same period last year, and the overall number of rental homes available is now 18%* higher than it was a year ago . However, tenant demand has decreased by 7% compared to March 2024.* Despite the increase in supply, the average number of enquiries per rental property remains high, with 12 enquiries per property, down from 16 at the same time last year.
Tenant Trends
Tenant preferences are evolving in response to changing economic conditions and lifestyle choices. There is a growing demand for properties that offer better value for money, with tenants increasingly seeking homes in suburban and regional areas where rents are more affordable. The rise of flexible working arrangements has also influenced tenant decisions, with many opting for locations that provide a better work-life balance.
Regulatory Considerations
The introduction of the Renters’ Rights Bill later in 2025 is expected to reshape the rental landscape. While the bill aims to enhance tenant protections, it may also lead to increased costs and complexity for landlords, potentially affecting the supply of rental properties. Additionally, the government's consultation on requiring private rented homes to have an energy rating of 'A', 'B', or 'C' before they can be let out from 2028 could necessitate significant investment from landlords to meet these standards .
Outlook for 2025
Looking ahead, rents are expected to increase by 3-4% over the course of 2025, with slower growth in high-cost areas and steeper increases in more affordable regions. The rental market is likely to remain competitive, with tenant demand continuing to outpace supply in many areas. Landlords will need to navigate evolving regulations and tenant expectations to maintain a successful rental business .
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