The average advertised rent for newly listed properties outside London has climbed by 1.5% this quarter (+£20) to reach a new record high of £1,385 per calendar month (pcm).
This marks the third consecutive quarterly record in 2025, though the annual rate of growth has slowed to 3.1%, the lowest since Q3 2020.
In the capital, average advertised rents rose by 0.9% (+£24) this quarter to another record of £2,736 pcm. However, rents in London are now only 1.6% higher than a year ago, a figure not seen since Q2 2020, highlighting a cooling market.
The number of homes available to rent has increased by 9% year-on-year, helping to stabilise rent growth across the country. Despite this improvement, supply remains 23% below 2019 levels, though this is the closest the market has come to pre-pandemic conditions in four years.
The pace of new rental listings, however, has slowed – now just 1% higher than a year ago – while tenant demand has fallen 14% year-on-year, indicating a gradual rebalancing between supply and demand.
Policy and tax changes appear to be weighing on landlord sentiment. The stamp duty increase on rental home purchases introduced last October, alongside rumours of a potential national insurance tax for landlords in the upcoming Autumn Budget, may be discouraging new investment.
The forthcoming Renters’ Rights Bill is also adding uncertainty. In a recent Rightmove survey, one in three landlords said they were considering exiting the market in the future, while two-thirds (66%) felt unsupported by the government. Fewer than half (43%) said they were fully aware of and prepared for the incoming legislation.
Although average earnings have risen by 5% over the past year – outpacing rent growth – renting still absorbs 44% of the average salary, up from 40% five years ago.
For renters hoping to buy, the average 20% deposit for a first home has increased by over £5,000 in the last five years, from £40,326 to £45,374, further stretching affordability.
Landlords also face financial headwinds. The average interest rate on new buy-to-let mortgages is 4.87%, down from 5.21% last year but well above the 2.93% rate seen before the 2022 mini-Budget.
Nearly a third (29%) of landlords report that rising mortgage rates are affecting their plans to expand, while 17% are considering reducing the size of their portfolios.
Rightmove’s Colleen Babcock said: “The majority of landlords are looking to stay in market and even grow their portfolios which is positive for tenants, but there are clearly challenges for those looking to invest in rental property. Sustained high mortgage costs mean landlords need to make sure purchases are viable, and uncertainty around legislation like the Renters’ Rights Bill and what may or may not be in the upcoming Autumn Budget isn’t helpful when looking to make financial investments.
“Landlords who were considering selling up over the next year told us that legislation changes were their biggest source of frustration. The government needs to consider this when setting its policy agenda over the next twelve months, otherwise we may see more landlords choose to leave the sector which will be to the detriment of tenants.”
Read the orginal article: https://propertyindustryeye.com/record-rents-as-fewer-new-homes-enter-the-rental-market/
