Zoopla’s latest Rental Market Report shows the rental sector entering a new phase of cooling, shaped largely by improved mortgage affordability and a sharp adjustment in migration numbers.
Annual rental growth has slowed to 2.2% as of October, down from 3.3% a year earlier. Average UK rent now sits at £1,320 a month, only £30 higher than last year, signalling clear evidence that the extreme upward pressure seen since the pandemic is easing.
MORE FIRST-TIME BUYERS
Demand for rented homes has fallen 20% year on year. With ONS data pointing to a 78% drop in net migration between June 2023 and June 2025, and mortgage pricing continuing to improve, more would-be tenants are crossing into homeownership instead.
Zoopla expects around 20% more first-time buyers to purchase in 2025 – many of whom are exiting the rental market.
That shift is already increasing supply: there are now 15% more homes to rent than a year ago, with the average agency branch carrying 14 listings, up from a low of eight in 2022.
COOLING DEMAND
Time to rent has risen to an average of 17 days – 18% longer than last year and 42% longer than during the pandemic’s peak rental demand.
The slowdown is visible across all regions, with Scotland seeing the quickest lets at 14 days and the West Midlands the slowest at 19.
This extended marketing period signals a new price-sensitive phase for landlords – one that could influence remortgage and portfolio strategies throughout 2026 as yield expectations rebalance.
RISING RENTS
Rental growth is now strongest in lower-value regions where affordability gives landlords more headroom: the North East leads at 4.5%, followed by the North West at 3.2%. Growth is softest in London (1.6%), the West Midlands (1.7%) and Scotland (1.7%).
Some local markets are already seeing year-on-year declines in new-let rents; Birmingham (-1.5%) and Dundee (-1%) among them. Meanwhile Carlisle (8.1%), Chester (7.4%) and Motherwell (7%) are still reporting strong increases.
WELCOME RELIEF
Richard Donnell (main picture, inset), executive director at Zoopla, said: “The rental market has made a big stride back towards normality over 2025 after a prolonged period of sky-high demand and a lack of homes for rent.
“This is welcome relief for renters who can expect to see a greater choice of homes, slower rent increases and a less competitive market.”
BARRIER TO ENTRY
But he added: “The high costs of buying a home remain a barrier to many renters, which will support demand for renting over 2026. While there are signs that landlords are buying homes again, we do not expect a big increase in supply, meaning rents are set to increase by 2.5% over 2026.”
UPWARD RENTS
Adam Jennings, head of lettings at Chestertons, said: “Since the Budget, more aspiring first-time buyers are taking the necessary steps towards homeownership, which is further boosted by the current choice of mortgage deals.
“This has somewhat dampened demand for rental properties in some parts of the country and could result in rent levels remaining fairly balanced in 2026.”
LANDLORDS COULD SELL
But he added: “That being said, if the sales market improves, some landlords may sell rental properties they had previously held back, potentially reducing rental supply.
“Combined with the ongoing strong tenant demand, particularly in London, this could cause rents to resume their upward trajectory.”
