The UK housing market cooled again in August, with fresh RICS data showing fewer buyers and falling prices across most regions. For landlords, the standout signal is a sharp drop in new rental instructions, tightening supply and pointing to further rent increases that could lift yields but intensify tenant competition.
Buyer demand falters while prices soften
The August 2025 RICS Residential Market Survey reported a net balance of -17% for new buyer enquiries, down from -7% in July, signalling a faster slowdown in demand. Agreed sales also slipped to a net balance of -24%. House prices dipped nationally, with East Anglia and the South West showing the steepest falls—net balances of -64% and -46% respectively—while Northern Ireland remains an outlier with continued price growth.
Emma Cox, MD of Real Estate at Shawbrook, told surveyors: “The property market is continuing to see a lull in activity, with a further drop in house prices in this buyers’ market… Most are employing a ‘wait-and-see’ strategy, which could bring the market to a standstill until any property tax changes are ruled out.”
For buy-to-let investors, softer prices in southern regions may tempt opportunistic purchases, though many will weigh this against rising borrowing costs and political uncertainty over property taxation.
Rental stock dries up, pushing rents higher
While sales cool, the lettings picture is different. Landlord instructions fell sharply, with a net balance of -37%—the weakest reading since April 2020. Tenant demand held steady at +5%, and a net balance of +27% of respondents expect rents to rise over the next three months, with around 3% annual rent growth forecast nationwide.
Russell Anderson, Commercial Director of Mortgages at Paragon Bank, warned: “A decline in landlord instructions is further evidence that supply is failing to meet the continuing demand for privately rented homes… We need to ensure that investment in the private rented sector remains viable, creating an environment where landlords feel confident to grow and maintain their portfolios.”
For landlords, this imbalance offers potential for stronger yields, but it also underscores the need for policy stability to maintain investment confidence.
With house prices edging down and inflation still unsettling the interest rate outlook, landlords seeking value may find the best opportunities in northern regions and parts of the Midlands where yields remain resilient. Yet looming Budget announcements on property tax could influence buying decisions in the months ahead.
Editor’s view
Falling sales and dwindling rental stock create a curious mix: landlords face higher borrowing costs but enjoy the prospect of rising rents and reduced competition in key regions. The next Budget will be critical—will the government steady the ship with balanced policy, or tighten the screws further on private landlords? For now, those holding quality rental stock are positioned to benefit from a market that increasingly favours the patient investor.
