UK Rental Market Update – September 2025
The UK rental market is shifting into a new phase. After years of soaring demand and limited supply, we’re now seeing signs of balance returning. For landlords, letting agents, and tenants alike, these changes are opening up new opportunities while also creating fresh challenges.
More Landlord Investment, More Homes to Rent
Since 2020, rents have risen by 36%, far outpacing the 20% growth in house prices. That sharp increase has pushed average gross yields to around 6% nationwide, making rental property investment appealing once again.
The result? More landlords are stepping into the market. In fact, new buy-to-let loans for property purchases rose by 60% in early 2025. At the same time, many renters are making the jump to homeownership thanks to improved mortgage affordability, which has boosted borrowing capacity by around 20%.
Together, these factors are increasing the number of rental homes available and giving tenants more choice than they’ve had in years.
👉 For letting agents, this surge in stock is a chance to expand portfolios—but it also means landlords need guidance on pricing competitively, keeping properties in good condition, and delivering the service tenants expect.
Affordability at Its Limit
While demand is cooling, affordability remains the biggest constraint. Over the past five years, the average UK rent rose by £80 per week that’s more than £4,000 a year.
Not all markets can sustain this. Some cities are already seeing rents edge down:
Bristol: -0.5%
Leeds: -0.6%
Regional growth is also slowing, with London, Scotland, and Yorkshire & the Humber at around 2% annual growth, while the North East leads at 4.6%.
For many households—particularly those on below-average incomes or reliant on housing benefit—rent increases have stretched budgets to breaking point. Agents now face the challenge of balancing landlords’ expectations with tenants’ ability to pay.
The Outlook for 2025
The market is normalising. Supply is rising, demand is cooling, and the frenzied conditions of recent years are fading. Our outlook is for rental inflation to steady at around 3% over 2025.
The long-term solution? Continued investment in rental stock. More homes mean more choice, healthier competition, and ultimately, a fairer rental market for both landlords and tenants.
✨ Takeaway for landlords & agents: The days of double-digit rent hikes are over. Success now depends on realistic pricing, high property standards, and excellent service. Agents who can guide landlords through these shifts will stand out in a softer market.
