UK Rental Market Feels the Chill as Nationwide Slowdown Outpaces Forecasts
The UK rental market is cooling off faster than expected, with new figures from Hamptons revealing a significant downgrade in rental growth projections for 2025.
The estate agency has slashed its forecast for rental growth next year from 4.5% to just 1.0% across the country. It’s a sharp shift—one that paints a more subdued picture of the market than previously anticipated.
June’s data shows that rents on newly let properties edged up a mere 0.4% year-on-year. That’s the weakest pace since August 2020. Some regions are already feeling the pinch. London rents dropped by 2.5%, Wales by 0.9%, and Scotland by 0.5%.
What’s behind the shift? A clear decline in demand. Tenant interest dropped 11% in the first half of 2025 compared to the same period last year. That’s also 20% below pre-pandemic levels in 2019. A key driver here is improving mortgage affordability, which is pushing many renters to take the leap into homeownership.
Despite the immediate slowdown, Hamptons maintains that medium-term pressures will keep rental prices on the rise.
“The rental market has softened more quickly than we anticipated towards the end of last year.
What initially appeared to be a London-centric slowdown has now spread across the country, with rents declining in multiple regions and growth easing elsewhere,” said Aneisha Beveridge, Head of Research at Hamptons.
She also pointed to a shift in renter demographics. “More affluent renters are becoming first-time buyers, while the economic slowdown is limiting what others can afford.”
Yet, she was clear this doesn’t mean rental prices are set to flatline permanently.
“The structural shortage of rental homes remains unresolved, and upcoming regulatory changes, such as the Renters’ Rights Bill and new EPC requirements, are likely to constrain supply further and add to landlords’ costs.”
And there’s more to come. A slowdown in build-to-rent developments this year is expected to curb the supply of new rental properties in the years ahead. Combined with ongoing regulatory pressures, these factors could drive renewed rental growth—just not immediately.
The updated forecast from Hamptons now sees rents climbing 3.5% by the end of 2026, followed by a further 3.0% in 2027. But the drag of a weakening labour market is likely to shave around 0.5 percentage points off growth annually.
So, while the UK rental market may be taking a breather in the short term, the longer-term outlook remains cautiously upward. The supply gap hasn’t gone away—and for tenants, that means affordability could stay on edge for years to come.
