Average rents across Britain rose by just over 2% in 2025, the weakest annual increase for seven years as easing demand and improving supply brought a measure of stability back to the lettings market.

Data from Rightmove shows that the average advertised rent outside London fell by 1.1% in the final quarter of the year, a drop of £15, leaving the typical monthly rent at £1,370.

It marked only the second quarterly fall in rents in the past five years. Over the full year, rents outside the capital rose by 2.2%, or £29, the lowest annual growth rate recorded at the end of a year since 2018.

London followed a similar pattern. Average advertised rents in the capital fell by 0.7% in the final quarter, down £20, to £2,716 per month. Annual growth in London was just 0.8% in 2025, the slowest rate since 2020, when rents fell sharply during the early stages of the pandemic.

AROUND THE REGIONS

Regional variations remained pronounced. Rents rose least in the North East, up 0.4 per cent, and in London, while the strongest growth was recorded in the North West, where rents increased by 3.6%, and in Yorkshire and the Humber, up 3.1%.

Market activity data points to a gradual rebalancing between supply and demand. The total number of homes available to rent is now 9% higher than a year ago.

However, compared with a decade ago, the stock of rental homes remains around a third lower, highlighting the persistence of a long-term shortage.

LANDLORD ACTIVITY

There are signs that landlord activity is beginning to pick up. UK Finance figures show that new buy-to-let mortgages taken out to purchase rental homes were up 13% in the year to October compared with the same period in 2024, while buy-to-let remortgages increased by 23%. The figures suggest both new investment and landlords choosing to retain existing properties.

Competition between tenants has also eased. In 2025 there were an average of 10 enquiries per available rental home, down from 14 in 2024, though still above the pre-pandemic average of six seen in 2019.

Pressure varies by region: London recorded an average of seven enquiries per property, while the North West and Scotland saw around 16.

IMPROVING AFFORDABILITY

Falling mortgage rates are improving affordability for landlords. Rightmove’s daily buy-to-let mortgage tracker shows the average 2-year buy-to-let rate for a landlord with a 25% deposit has fallen to 4.84%, compared with 5.51% a year earlier.

Looking ahead, Rightmove expects average advertised rents to rise by a further 2% during 2026. While the balance between supply and demand has improved markedly since the pandemic years, the underlying shortage of rental homes is expected to keep upward pressure on rents.

“There is still a long-term shortage of available rental homes.”

Colleen Babcock (main picture, inset), Rightmove’s property expert, said: “There is still a long-term shortage of available rental homes, but it looks like landlords are taking advantage of cheaper available mortgage rates, and more available homes will benefit tenants.

“Existing tenants or those looking to rent their own home for the first time are likely to experience a much more settled and balanced market than a few years ago, when the competition to secure a home was frenetic.

“There is much greater availability of homes, and fewer tenants to compete with now, which should hopefully make the experience more positive for renters.”