Rents fall and a supply surge weighs on house prices

Asking rents are slipping deeper into decline, adding fresh downward pressure to house values at the start of 2026, one index reveals.

Home.co.uk says that annualised rent growth is now running at -4.1%.

Every English region, along with Scotland and Wales, is now showing year-on-year falls.

The news follows an announcement from Hamptons that newly agreed rents have shown the first annual fall since 2011.

Where rents fell

The East Midlands is experiencing the sharpest contraction, where asking rents are down 12.5%.

In London, the picture is increasingly uneven with 18 of the capital’s 33 boroughs now recording rent falls.

Landlords in Kensington and Chelsea are part of the slowest moving market.

Homes there are taking an average of 49 days to let and advertised rents have dropped 6.9% over the past 12 months.

Sellers return

Home sales activity is also reshaping market dynamics with vendor numbers recovering strongly in December after November’s lull.

The platform says there are 20% more homes coming up for sale than a year earlier.

Scotland, the North East, East Midlands and North West saw the most pronounced increases to push supply to its highest January level since 2015.

Although unsold stock has eased slightly in recent months, seasonal patterns point to a swift build up through the first half of the year.

Prices are fragile

However, house prices remain fragile and across England and Wales, values are just 0.5% higher than in January 2025.

Most regions posted monthly declines, with the East of England showing the steepest drop at 0.8%.

Areas without falls include the North East with growth of 2.7%, just ahead of the North West.

London’s prices are down 1% on an annualised basis.

Landlords are squeezed

Longer selling times are reinforcing the downward trend, with typical time on market now five days slower than a year ago.

The South West stands out for the sharpest deterioration, where extended marketing periods are feeding into corrections.

According to Home.co.uk, the housing market has reached a decisive point.

It warns that overall growth is drifting towards zero, and in some areas below, weakening confidence even among long term optimists.

However, falling rents combined with real terms price erosion are squeezing returns from both sides for landlords.