UK rents are forecast to rise by 12% over the next five years, according to Savills, as the property firm predicts a calmer and more predictable market following several years of exceptional turbulence. However, landlords warn that continued regulation and tax pressures could undermine this stability if investment continues to fall.
Rental market steadies after years of volatility
Savills’ five-year outlook suggests the private rented sector will finally return to pre-pandemic norms. The firm expects rental affordability to gradually improve as income growth outpaces inflation and demand cools.
Emily Williams, director of research at Savills, noted that the “uncharacteristically turbulent” period since 2020 had distorted the usual link between income and rent growth. “Rental growth at a macro level is typically closely tied to income growth, but that trend was turned on its head in recent years,” she said. “In 2025, the average renter spent around 32.4% of gross household income on rent, up from 30.4% five years earlier — the sharpest decline in affordability since the 1990s.”
According to HomeLet, the proportion of income spent on rent has already begun to fall — from 33.4% at the end of 2023 to 32.4% by Q3 2025 — a sign the market is beginning to rebalance.
Supply squeeze still threatens landlord confidence
While tenant demand has driven rents to record highs, supply shortages remain the sector’s biggest structural risk. Savills data shows landlord instructions to let homes have been falling since 2017, as a result of rising interest rates, Section 24 mortgage tax changes, and uncertainty over future regulation.
The Renters’ Rights Act, now law, has raised fresh concerns among landlords about the viability of remaining in the sector. “If investment into the sector shrinks further, we could see a supply-side shock to match the demand surge that has already made renting so difficult in recent years,” Williams warned.
The Build to Rent pipeline remains modest by comparison, with just 15,000 completions annually against an estimated 4.9 million households renting privately. This imbalance, Savills argues, could prevent the smoother market conditions many tenants and landlords are hoping for.
Demand cooling but new risks could emerge
Tenant demand surged between 2021 and 2023 — fuelled by post-pandemic moves and an increase of 600,000 net new households through migration — representing a 10% rise in private rented sector demand within just two years. That intensity has now started to fade.
Savills expects the market to “return to the more normal conditions of the 2010s” as first-time buyer activity increases, supported by more flexible lending criteria, and as net migration eases. Over the next five years, rental growth is forecast to move in line with both CPI inflation and household income growth, signalling a return to sustainable levels.
Yet, landlords remain cautious. If supply constraints worsen or migration surges again, the balance could quickly tip back in favour of rising rents and reduced tenant affordability. As Williams added, “Now that the Renters’ Rights Act is law, it’s vital that being a landlord remains profitable and appealing.”
Editor’s view
Savills’ projections offer reassurance that the market may finally be stabilising after a tumultuous decade. But for landlords, the underlying concern remains: without a more balanced policy environment, the risk of a future supply crunch is ever-present. Whether the next five years bring true normality will depend on whether government and lenders create conditions that keep landlords investing rather than exiting.
Author: Editorial team — UK landlord & buy-to-let news, policy, and finance.
Published: 11 November 2025
Sources: Savills, HomeLet, RICS, ONS
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