The pace of rent increases in the UK has hit its lowest level since August 2021, with average rents for new lettings rising by just 3.9% over the past year. Zoopla’s latest Quarterly Rental Market Report, released on 11th December, attributes the slowdown to a narrowing supply-demand gap and growing financial strain on renters.
After years of relentless rent hikes, is the market finally cooling—or are renters simply reaching breaking point?
Affordability pressures weigh heavily on renters
Over the past three years, the cost of renting has skyrocketed. The average annual rent has climbed by £3,240, rising from £12,000 in 2021 to £15,240 in 2024—a staggering 27% increase that far outstrips the 19% growth in earnings over the same period.
This affordability crunch is particularly evident in high-cost regions like London, where rents are now 1.7 times higher than the national average. While rents in the capital rose by only 1.3% this year—down sharply from 8.7% a year ago—the average monthly cost still stands at an eye-watering £2,190.
“Private renters moving home have faced rents rising faster than earnings over the last three years,” said Richard Donnell, Zoopla’s Executive Director. “The number of rented homes hasn’t grown since 2016, creating scarcity for renters at a time when demand has boomed on a strong labour market and the rising cost of home ownership.”
Where are rents rising fastest?
While London’s rental market cools, other regions tell a different story. Northern Ireland has seen the fastest growth at 10.5%, followed by the North East at 8.7%. These areas have historically lower average rents—£801 and £732 per month, respectively—making them more attractive to cost-conscious renters.
In contrast, inner London boroughs such as Tower Hamlets, Greenwich, and Kensington & Chelsea have seen rental growth stall, with increases of less than 1% this year. Meanwhile, outer London areas like Havering (5.9%) and Barking & Dagenham (5.2%) are experiencing stronger growth as renters seek better value for money.
Outside the capital, rental hotspots include Rochdale (11.9%), Blackburn (10%), and Burnley (8.9%), reflecting a shift towards more affordable markets near major cities. Interestingly, Nottingham is bucking the trend, with rents flatlining this year due to an increase in available rental properties.
What does 2025 hold for renters and landlords?
Despite a 12% increase in rental supply over the past year, Zoopla predicts rents will rise by an average of 4% in 2025, pushing annual rental costs to £15,850. The ongoing lack of rental properties is expected to keep upward pressure on prices, particularly in more affordable areas.
However, landlords are facing mounting challenges. The number of private rented homes has not grown since 2016, with many landlords selling off properties due to tighter regulations and higher borrowing costs.
Donnell commented: “The ambitions to expand home building are important as the quickest way to ease the pressure on renters is to boost the supply of private and social rented homes. Private landlords will continue to play an important role and should be encouraged to remain in the market.”
