Private rents across the UK rose by 5.9% in the year to July, easing from June’s 6.7% pace, according to fresh ONS data. While this slowdown offers a slight reprieve for tenants, landlords remain cautious, as yields are still being squeezed by higher borrowing costs and an uncertain policy climate.
Rental growth slows but pressure on tenants remains
The average rent now stands at £1,343 per month—almost £87 higher than a year ago. Regional differences remain stark: rents in the North East jumped 8.9% in the last 12 months, while London’s market saw just a 0.8% rise.
Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “Runaway rent inflation is flagging like a parent at the tail end of the school holidays. Stratospheric rent rises of around 10% have given way to a far less strenuous 5.9%. The problem for renters is that this has been cumulative.”
For landlords, the picture is less about headline percentages and more about underlying affordability. With average rental households left with just £62 spare each month after essentials, according to the HL Savings and Resilience Barometer, the ability of tenants to absorb future rent rises is fragile. This presents landlords with the classic dilemma: balancing fair increases against the real need to cover rising costs.
Paragon Bank’s Louisa Sedgwick noted that while moderation in rental growth is welcome, supply shortages remain the structural issue: “In order to increase PRS stock and slow rent inflation, investment must be financially viable and protected by balanced regulation that considers landlords’ interests as well as tenant rights.”
House prices edge higher as mortgage rates soften
On the sales side, the ONS reported a 3.7% rise in average UK house prices in the year to June, bringing the national average to £269,000. While that may sound positive, analysts warn that growth is patchy and driven by affordability shifts.
Zoopla’s Richard Donnell observed: “Improved access to mortgages is helping first time buyers buy homes and easing the demand for rented homes… House price inflation is volatile on the ONS measure but remains below the growth in average earnings which is helping to slowly improve affordability.”
Mortgage rates dipping below 5% on two- and five-year fixes has sparked fresh activity, with Garrington’s Jonathan Hopper calling it a turning point: “With the UK economy performing better than many had expected and mortgage interest rates inching lower, buyer sentiment is strong. The dynamic between sellers and buyers is beginning to look less like a tug-of-war and more like a cautious handshake.”
For landlords, stable pricing and cheaper debt could make selective acquisitions attractive again—especially in regions like the North East and Scotland where yields remain well ahead of the capital.
Landlords face policy uncertainty and market imbalance
While some commentators welcome the easing of rent growth, industry voices are warning that the fundamentals remain unchanged: tenant demand still far outpaces available rental stock. Propertymark chief executive Nathan Emerson highlighted the mismatch: “Across the UK there are typically six people making an application for every rental property available. This represents an extremely unhealthy situation where long-term investment is urgently needed.”
A London letting agent echoed this reality. Gareth Atkins, managing director of lettings at Foxtons, said: “The London lettings market remained red hot in July. Despite a modest uptick in supply, applicant demand surged by 25% month-on-month, resulting in over 18 applicants per available property.”
That intensity underlines the wider challenge. Even with rental growth slowing at the margins, landlords continue to face political headwinds—from looming rent reform legislation to uncertainty around Section 21. Many investors fear regulation could undermine the very supply needed to keep rental inflation under control.
Editor’s view
The ONS data confirms what many landlords already sense on the ground: the market is not cooling, it’s recalibrating. Rent growth may be slowing, but it is doing so at levels that still stretch tenants and complicate landlord decision-making. Meanwhile, modest house price recovery and easing mortgage rates could tempt professional investors back into selective buys, particularly in higher-yielding regions.
The bigger question is whether policymakers will finally acknowledge the structural imbalance. Without meaningful incentives for landlords to expand supply, today’s moderation in rental growth could be nothing more than a pause before the next climb.
