Good news for renters – the rental boom is finally over, says Zoopla

The rate at which rents are rising for newly rented properties slipped below inflation for the first time since the cost of living crisis sent rents and inflation spiralling, according to Zoopla.

The property portal said average rents for new lets were 2.8% higher in the year up to April, marking the lowest rate of rental inflation since July 2021.

That rise is also lower than the rate of inflation that the Office for National Statistics recorded in April at 3.5%.

The news is a good sign for tenants who have seen rents surge to record-highs, rising 21% across the UK over the last three years.

The figures only relate to new lets and not rent rises within tenancies. A recent survey of Generation Rent’s supporters found, on average, respondents were spending 39% of their income on rent. The government’s definition of an affordable home is no higher than 30%.

Ben Twomey, chief executive at Generation Rent said: “The price of new rents finally slowing will sadly not undo the enormous rent rises we have seen in recent years. It shows how the unchecked cost of renting since the pandemic has stretched renters so thin that we simply can’t afford to pay any more. 

“Our homes are the foundations of our lives. Limits on prices rightly exist for our energy and water bills, but the same protections don’t exist to stop landlords from hiking rents as they please. The government must act urgently on this, before even more of us are priced out of our homes.”

The 21% surge in the cost of rents has seen them increase five times faster than house prices over the last three years.

The average rent for a new let has surged by £219 a month over that time period, meaning tenants across the UK have gone from paying £12,800 a year in rent on average to £15,450 – a rise of £15,450.

But Zoopla said that weaker rental demand and growing affordability pressures have seen rent rise slow sharply.

Zoopla data shows rental demand is 16% lower over the last year, but this remains more than 60% above pre-pandemic levels.

The property portal said lower migration into the UK for work and study has been a factor in falling demand while stability in mortgage rates and improved access to mortgage finance for first-time-buyers has eased pressure on the market.

But renters are still facing a limited supply of homes for rent.

The number of homes on the market is 20% lower than pre-pandemic levels, despite being 17% higher than a year ago.

Lower levels of new investment by private and corporate landlords is limiting growth in the private rental market, Zoopla experts said.

Read more:

• Labour must stop landlords hiking rents if Keir Starmer is to help working people
• Renters are paying £3,240 more a year since the pandemic – and it’s pushing them to their limits
• Would 1.5m landlords selling up and leaving the rental market really be a bad thing?

Looking to the remainder of 2025, UK rents remain on track to increase by 3-4% over the rest of the year, said Richard Donnell, executive director of research at Zoopla.

“Rents rising at their lowest level for four years will be welcome news for renters across the country. The average annual cost of renting is over £2,500 a year higher than three years ago, the same as the increase in average mortgage repayments for homeowners,” said Donnell.

“While demand for rented homes has been cooling, it remains well above pre-pandemic levels sustaining continued competition for rented homes and a steady upward pressure on rents. The pressures are particularly acute for lower to middle incomes with little hope of buying a home and where moving home can trigger much higher rental costs. 

“The rental market desperately needs increased investment in rental supply across both the private and social housing sectors to boost choice and ease the cost of living pressures on the UK’s renters.”

Labour’s Renters’ Rights Bill is on schedule to come into force later this year to ban no-fault evictions and give tenants more power.

While the legislation will look to ban letting agents and landlords from sparking bidding wars between tenants, the bill has come under criticism for failing to tackle affordability in the private rental market.

The Renters’ Rights Bill has sparked claims from lobby groups that there will be a landlord exodus when it comes into force. Rightmove experts recently said they “didn’t expect much impact on market activity” from the new laws.

But Angharad Trueman, president of letting agent body ARLA Propertymark, said: “It’s interesting to see that rent growth has slowed year on year. This is more than likely down to rent levels reaching their peak in many places across the UK, as they have been rising to unrealistic levels for years.

“From the outside looking in, it may look as though landlords and their greed are at the heart of this problem, however, this is not the case. A significant number of landlords face increased costs across the board, from continuous legislative hurdles, tax hikes, and mortgage increases, many are struggling to break even on their costs.

“Crucially, the fundamental pressures and reasons for these rises remain. The bombardment and penalisation of landlords is pushing many to leave the market altogether or prohibit new investors from entering, which is creating an ever-growing undersupply of private rented homes against a backdrop of increasing demand from renters. It’s crucial that support is available and incentives are introduced for investment moving forward in order to make private rented housing more affordable in the long term.”

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