Tenant demand spike is over but supply and affordability pressures remain

Rental demand has eased, but affordability constraints and supply issues remain, according to a new report.

A report by management platform Hello Neighbour on what drives UK rent prices ten years of evidence, says rents will increasingly depend on what tenants can afford and how often existing rental homes return to the market, rather than another surge in demand.

The report also reveals some landlords are pricing higher at the point of advertising on the view that in-tenancy increases are now harder to secure.

In a more normalised market

Hello Neighbour points to ONS data showing that migration was the biggest driver of the sharp rise in rental demand in 2022 and 2023. Net migration peaked at 944,000 in the year to March 2023, before falling to 171,000 in the year to December 2025.

Rent inflation for new lets also peaked at 11.9% in 2022 and 9.7% in 2023.

Hello Neighbour says the impact of tighter work visa rules, restrictions on student dependants and changes to overseas recruitment has already been felt, with rental demand now settling at a more stable level.

Phil Shelley, chairman of Hello Neighbour, explains: “The last decade was a demand story.

“Exceptional levels of net migration added households that rent at three times the rate of the UK-born population, at exactly the point availability of rental property started to see the impact of tenants staying longer, with rents rising sharply as a result. That phase is over.

“Viewing requests have halved in three years but are now steady. We are in a more normalised market.”

Pressure comes from availability

The data also reveals the English private rented sector reached a record 5.03 million dwellings at 31 March 2025, marking a sixth consecutive year of growth.

However, availability, particularly outside London, has fallen as tenants stay in their homes for longer. Average tenancy lengths rose by 40% in four years, from 773 days in 2021 to 1,085 days by April 2025.

At the same time, supply is failing to keep pace, with England adding just 208,600 net additional dwellings in 2024-25, the sixth consecutive year below the 300,000 benchmark.

There is also a large pool of potential demand waiting outside the market. In 2025, 28.7% of UK adults aged 20 to 34 were living with their parents, up from 25% in 2015.

The data also reveals affordability remains a key constraint, with average private rent taking up 36.3% of the median renting household’s income in England, above the ONS’s 30% threshold.

Mr Shelley added supply pressure now comes from availability.

He said: “Tenants are staying close to three years on average, housebuilding is running someway short of what is needed, and there is a queue of young adults at home who would enter the market if they could afford to. Incomes are now the binding constraint.

“We therefore expect moderate rent growth broadly in line with wages.”

Landlords setting higher asking rents

Hello Neighbour reports that some landlords are setting higher asking rents when advertising properties, anticipating that in-tenancy rent increases will be harder to secure. This could explain the seemingly contradictory picture of rising advertised rents alongside fewer enquiries per property.

Mr Shelley said: “We would caution landlords against reading this as a lasting gain. A rent above what the market will bear is precisely what the challenge mechanism exists to correct, and an empty property can quickly cost more than the increase was worth, even if it isn’t challenged.”

In London, advertised rents rose 9.8% year on year in August 2026, up from 8.7% in July. It was the fourth consecutive monthly rise and the strongest reading since April 2025.

Across the past three months, advertised rents have risen by around 8% year on year.

Since the Renters’ Rights Act came into force on 1 May, the four monthly readings have climbed from 3.7% to 6.4%, 8.7% and now 9.8%.