0:06 AM, 4th March 2025, About a month ago
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The pace of the UK’s rent rises is at the slowest in three and a half years – while demand continues to increase, Zoopla reports.
Its figures reveal that average rents for newly let properties have risen by a modest 3% in the past 12 months.
That’s a big drop from the 7.4% surge recorded a year earlier.
Despite this slowdown, the property platform warns that upcoming PRS reforms will stymie landlord investment to push up rents.
Richard Donnell, an executive director at Zoopla, said: “Rents are rising more slowly than average earnings, which will be welcome news for renters after three years where rents have risen rapidly.
“Affordability remains the primary constraint on rental inflation rather than increased supply and greater choice of homes for rent.”
He added: “We expect demand for rented homes to continue to exceed available supply in 2025, keeping a steady upward pressure on rents.
“The overall stock of private rented homes is unlikely to increase in size in the coming years due to rental reforms and policy changes impacting levels of new investment.”
He went on to say that PRS reforms should be rolled out to minimise the negative impacts on available supply, which hit those with lower incomes hardest.
Zoopla says that the imbalance between the number of properties available and the appetite for renting is gradually easing.
Its quarterly report highlights an 11% uptick in homes listed for rent compared to last year.
There has also been a 17% dip in demand, driven partly by lower immigration and a boost in first-time homebuyers leaving the sector.
However, tenant competition remains fierce with 12 prospective tenants vying for each available property.
That figure is down 42% from the peak between 2022 and 2024, but it’s still twice the level seen before the pandemic.
The data also shows that it is renter affordability challenges, rather than a flood of new listings, which the driving force for the slowdown in rent rises.
The typical yearly expense of renting has ballooned by £3,000, reaching £15,400 – or £1,284 per month – placing a heavy burden on households.
Official data from the Office for National Statistics underscores this strain, showing private renters faced sharper rises in living costs than any other group in 2024.
Zoopla warns that the rental sector desperately needs more properties to ease the crunch, but the Renter’s Rights Bill is poised to complicate life for landlords in England.
It will discourage investment and may push up operational costs and deter PRS growth which has stagnated at around 5.5 million homes since 2016.
Plans to impose an EPC rating of C deadline by 2030 and higher mortgage rates since 2022 will only tighten the screws further, the firm says.
It is also predicting rents for new tenancies rising by 3% or 4% this year.
Of the areas with the highest rent rises, Blackburn leads with a 10.1% jump, Stoke climbed 9.8% and Rochdale was up by 9.5%.
London’s rent inflation has cooled to just 1.1%, while Nottingham bucks the trend with a 1.2% rent fall, reflecting local shifts in availability and interest.
Allison Thompson, the national lettings managing director at Leaders Romans Group, said: “The rental market remains under pressure, and while affordability challenges are influencing demand, the bigger concern is the long-term impact of upcoming rental reforms.
“The Renters’ Rights Bill, set to be introduced this year, has the potential to reduce the supply of rental homes, as landlords reconsider their position in the market.”
She adds: “Without careful implementation, these changes could exacerbate existing shortages, ultimately putting further upward pressure on rents.
“Encouraging investment in the private rental sector is crucial to maintaining a balanced market and ensuring tenants have access to a stable supply of homes.”
Angharad Trueman, the president of ARLA Propertymark, said: “The issue of demand far outstripping the number of homes available to rent is continuous.
“Month on month, Propertymark letting member agents report a lack of supply compared to the ever-growing number of people looking to rent a home, most recently stating that the average number of applicants per member branch is around seven people for each available property.”
She added: “Landlords are battling ongoing increases in their overheads including rising taxes, mortgage rates and continuous challenges of ever-complex regulation, with many finding it difficult to break even on costs.
“The rental landscape continues to put pressure on current and future investors and, ultimately, without support for landlords to enter in the future or remain in the market, rent prices and stock levels are likely to continue to worsen.”
