Rents for newly let homes across the UK have slowed sharply, with year-on-year growth at just 0.4% in June 2025 — the slowest pace since August 2020 — as tenant demand begins to cool. But while Hamptons has revised down its short-term rent forecast, experts warn this is no sign of long-term relief, with structural undersupply, tighter regulations, and rising landlord costs expected to keep upward pressure on rents into 2026 and beyond.
Hamptons has now slashed its 2025 rent growth forecast from 4.5% to just 1%, after tenant enquiries dropped 11% in the first half of the year compared to 2024 — and demand is now 20% below pre-Covid 2019 levels. The estate agency attributes much of this shift to falling mortgage rates luring affluent renters into homeownership. But landlords remain on edge, with new regulations and ongoing supply issues clouding the medium-term outlook.
Rent falls spread beyond London for the first time since pandemic
The slowdown, which began in prime postcodes in the capital last year, has now filtered into regions across Britain. “The rental market softened more quickly than we anticipated towards the end of last year,” said Aneisha Beveridge, head of research at Hamptons.
“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. A combination of falling mortgage rates and a weaker labour market has shifted the dynamics — more affluent renters are becoming first-time buyers, while the economic slowdown is limiting what others can afford.”
In London, rents fell 2.5% year-on-year, with inner boroughs hit harder — rents there dropped 3.8%, bringing average prices down to £2,694, the lowest since early 2023.
Scotland and Wales also recorded rent falls of 0.5% and 0.9%, respectively. In Scotland, it marked the first annual rent dip since December 2019. But despite these figures, Beveridge insists: “This isn’t the end of the rental growth story.”
Landlord pressures mounting as new rules tighten grip
The structural shortage of rental housing — down 34% compared to 2019, according to Hamptons — continues to underpin the long-term outlook for rent rises. And while some landlords may welcome easing mortgage rates, the bigger worry lies in what’s still to come: heavier compliance costs, EPC upgrades, and sweeping reforms under the Renters’ Rights Bill, which threaten to shrink supply even further.
Beveridge warned, “The structural shortage of rental homes remains unresolved, and upcoming regulatory changes… are likely to constrain supply further and add to landlords’ costs.”
There’s also evidence of a shift in letting dynamics. Properties are taking longer to let, not because of landlord pullback, but due to more cautious tenants. Supply is technically up 8% year-on-year, but uptake has slowed.
Meanwhile, the jobs market offers little reassurance. With 178,000 fewer payroll employees than a year ago and unemployment projected to rise to 5% by 2026, affordability constraints may keep tenant demand subdued, at least in the short term. Pay growth is also expected to cool, from 5% in May to just 3% in 2026, adding to pressure.
Long-term rent rises still expected despite temporary pause
Although the market is clearly cooling in some areas, Hamptons remains confident that rents will continue to rise over the next two years. It forecasts rent increases of 3.5% in 2026 and 3% in 2027, both outpacing expected inflation and wage growth. And with a slowdown in build-to-rent completions and new regulation choking off smaller landlords, there’s little sign of a significant boost to supply on the horizon.
This all leaves landlords in a tricky position. On one hand, recent rent stagnation may seem like a cause for concern. But in reality, it reflects a narrow, short-term trend driven by falling interest rates — not a structural fix. With new regulation looming and fewer rental homes available, the power balance in the private rented sector may shift again.
