Tenant demand and affordability issues remain key challenges
The average rent for newly listed properties outside London has reached a new high of £1,349 per calendar month, according to Rightmove’s latest Rental Trends Tracker. The 0.6% quarterly increase is the smallest for this time of year since 2020.
In London, rents edged up by just £3 to £2,698 per month, setting a 14th consecutive record and standing 2.5% higher than a year ago.
The rise comes despite more homes becoming available. In March, the number of new rental listings was up 11% year-on-year, while total rental stock was 18% higher than a year earlier. Tenant demand, however, has dipped by 7% compared to the same period last year.
More buy-to-let lending has supported the increase in supply. UK Finance reported a 32% jump in new buy-to-let loans at the start of 2025 compared to the previous year. Additionally, some renters are moving into homeownership. The first quarter saw a 7% rise in agreed sales in the typical first-time buyer sector, encouraged by lower mortgage rates and a rush to beat the April 1 stamp duty changes.
Despite improving supply, the rental market remains under pressure compared to pre-pandemic levels. Tenant demand is still 10% above 2019, and available stock is down by 33%. Each rental home now receives an average of 12 enquiries, down from 16 at the start of last year but still more than double the 2019 average.
Regional differences are significant. London shows the best supply-demand balance, with eight enquiries per listing. By contrast, properties in the North West attract 18 enquiries on average.
Greater choice has led to more landlords reducing their asking prices. A quarter of rental listings have seen price cuts, the highest proportion at this time of year since 2018. Stretched affordability is a major factor, with rent increases having outpaced wage growth — average earnings have risen by 31% since 2020, compared to a 40% increase in rents.
There are no major signs yet that the upcoming Renters’ Rights Bill is impacting market behaviour. However, the legislation is expected to bring broader changes for tenants, landlords and agents.
“The rental market is still really busy, and as the regional picture shows, it’s likely to feel even busier in some areas of Great Britain than others,” said Colleen Babcock (pictured left), property expert at Rightmove. “It’s good news for tenants that, on the whole, the balance between supply and demand is improving. This is having a knock-on effect on rental prices, with rents increasing more slowly and more landlords reducing their advertised price.”
“We’ve seen a strong start to the year, with a surge in new listings entering the market, while tenant demand levels remain robust,” added Marc von Grundherr (pictured centre), director at Benham & Reeves, also commenting on the Rightmove report. “The latest figures show that the number of new buy-to-let mortgages has increased considerably, as has the value of these loans.
“This activity is being driven by remortgages, which demonstrates the confidence that many buy-to-let investors still have within the sector, although there has also been an increase in new investment as well.”
However, for Angharad Trueman (pictured right), president of ARLA Propertymark, the recent rise in the supply of privately rented homes is not enough to meet demand long-term.
“We are unlikely to see any improvement in rent levels without the acknowledgment from various governments across the entire UK as to the importance that the private rented sector plays in housing the nation and the introduction of incentives for landlords to invest in the sector,” she said.
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