Rent rises drop to a four-low as PRS cools – Zoopla

The surge in UK rent prices has lost momentum, with annual growth dropping to 2.8% in April, the slowest pace since July 2021, Zoopla reveals.

Its latest rental market report highlights a sharp decline from the 6.4% rise recorded a year ago, bringing the average monthly rent to £1,432.

However, a shortage of available properties continues to pressure tenants, particularly those on lower to middle incomes.

Zoopla is forecasting rent increases of 3-4% for the rest of 2025.

‘Welcome news for renters’

Richard Donnell, the executive director of research at Zoopla, said: “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 homeowners.”

He added: “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.”

He says that the PRS needs more rental supply investment to help ease ‘cost of living pressures’ on renters.

Rent rises fall

Across the UK, the slowdown is evident and in Yorkshire and the Humber, annual rent rises have plummeted to 1.1%, down from 6.4% in 2024.

The drop has been driven by weaker growth in cities like Sheffield (1.9%), Bradford (1.4%) and Leeds (-1.5%).

The North East has seen growth ease to 5.2% from 9.4%.

Scotland’s rental market has cooled significantly, with growth falling from 9.1% to 2.4%, largely due to the scrapping of rent controls in April and affordability challenges.

Dundee, for instance, saw rents drop by 2.1%.

Demand is also lower

In London, inner areas like NW London (-0.2%) and WC London (-0.6%) are experiencing slight falls, with the capital’s overall growth at a modest 1.5%, averaging £2,175 per month.

Conversely, affordable regions near major cities are seeing sharp rises, with Wigan and Carlisle both up 8.8%, and Chester climbing 8.2%.

However, only five postal areas now report rent increases above 8%, down from 52 a year ago.

Zoopla says that over the past three years, rents have soared by 21%, far outstripping the 4% rise in house prices.

This has pushed the average annual rent to £15,450, a £2,650 increase since 2022, mirroring the rise in mortgage repayments.

Despite the slowdown, demand for rented homes is 16% lower than last year but 60% higher than pre-pandemic levels.

That has been fuelled by a 50% drop in net migration and better mortgage access for first-time buyers.

Supply, though improved by 17% compared to last year, remains 20% below pre-pandemic levels, intensifying competition for lower-income tenants, Zoopla says.

Reaction from the property sector

Adam Jennings, the head of lettings at Chestertons, said: “Overall, the UK’s rental market remains highly competitive as a growing population results in a continuous requirement for suitable housing.

“Whilst some areas of the UK may have witnessed an adjustment in supply or demand levels as well as rental inflation, the majority of cities and particularly London, still see a single property attract several tenant enquiries.”

Tom Bill, the head of UK residential research at Knight Frank, said: “Rental value growth has cooled over the last year, but upwards pressure remains thanks to tight supply.

“While some demand has transferred to the sales market as mortgage rates edge lower, a number of landlords have sold due to the tougher regulatory and tax landscape.

“As the Renters’ Rights Bill comes into force over the next 12 months, the upwards pressure on rents could intensify if landlords see added risks around the repossession of their property and void periods.”

Angharad Trueman, the president of ARLA Propertymark, said: “It’s interesting to see that rent growth has slowed year on year.

“This is more than likely down to rent levels reaching their peak in many places across the UK, as they have been rising to unrealistic levels for years.

“From the outside looking in, it may look as though landlords and their greed are at the heart of this problem, however, this is not the case.

“A significant number of landlords face increased costs across the board, from continuous legislative hurdles, tax hikes, and mortgage increases, many are struggling to break even on their costs.”