Zoopla Rental Market Report: Rents rising at lowest level for 3.5 years

Upcoming reforms in the rental market will limit new investment and the number of homes for rent

Rents rising at lowest level for 3.5 years as Zoopla warns upcoming rental reforms will continue to limit rental supply

 

  • Average UK rents for new lets are three per cent higher over the last year, down from 7.4 per cent a year ago

  • The supply/demand imbalance is narrowing, with 11 per cent more homes to rent compared to a year ago and demand is 17 per cent lower

  • There are still 12 renters chasing every home for rent – down 42 per cent on 2022-24 levels but still higher than pre-pandemic levels

  • Affordability constraints are slowing rental growth more than an increase in supply. The average annual cost of renting has increased by £3,000 to £15,400 per year

  • The rental market still needs more supply. Rental reforms combined with other proposed policy changes will limit new investment and supply growth

  • Rents for new lets are expected to increase by three to four per cent over 2025

  • Rents are growing fastest in more affordable cities like Blackburn (10.1 percent), Stoke (9.8 per cent) and Rochdale (9.5 percent)

 

Zoopla, one of the UK’s leading property websites, has released its latest Quarterly Rental Market Report1 and warned that upcoming reforms in the rental market will limit new investment and the number of homes for rent, keeping an upward pressure on rents.

Rental supply/demand imbalance narrows but it hasn’t closed

Rental market conditions are steadily improving after three years of chronic under supply and excess demand, although there is still an ongoing gap which is pushing rents higher in more affordable markets. There are 11 per cent more homes for rent while demand is 17 per cent lower due to lower levels of immigration and improved demand from first-time buyers.

The average UK rent for a new let now stands at £1,284pcm, an increase of three per cent compared to last year. This is the lowest rate of rental growth for three and a half years and is being driven by worsening rental affordability rather than a major increase in the supply of homes to rent.

The average letting agent has 13 homes for rent, up from a low of 10 in 2023 but still 22 per cent below the pre-pandemic average. ONS’ household cost of living data also shows that living costs for private renters rose faster than any other group in 2024.

 

Table 1: Rental supply is recovering slowly off a low base

 

The mismatch between supply and demand remains a challenge with 12 renters currently chasing each home for rent. This is almost half the level of competition for rented homes recorded between 2022 and 2024 (when rental demand was at its strongest), but is still double pre-pandemic levels.

 

Table 2: Supply/demand imbalance narrows but remains above average

 

Risk that rental reforms and policy change will limit the growth in rental supply 

The private rental market in England is facing some major policy changes, which are expected to limit new investment in private rented housing and the number of private rented homes in the next two to five years. Levels of new investment in private rented supply have been lower since tax changes introduced in 2016. Higher mortgage rates since 2022 have compounded the squeeze on new investment, meaning the number of private rented homes across Great Britain has been static at c5.5m since 2016. Demand has grown faster than supply, which is why rents have risen by 24 per cent over the last 3 years.

The Renter’s Rights Bill will increase the complexity and cost of being a landlord in England, and is likely to limit levels of new investment, and growth in rental supply, as landlords assess the impact of the changes, which are the biggest reforms in renting for 30 years.

Another future risk to private rental supply comes from proposals for private rented homes to have an energy rating of ‘A’, ‘B’ or ‘C’ before they can be let out from 2028.  Almost half (45 per cent) of rented homes require investment to get from a D rating to a C rating. While almost one in five (16 per cent) of private rented homes are currently ‘E’, ‘F’ or ‘G’ rated and, as a result, are more at risk of being lost from the rental market, eroding available supply.

Rents rise in more affordable cities 

The demand for renting has cooled across all regions and countries of the UK over the last year, and supply is starting to increase across all areas except the West Midlands where rental supply remains lower than this time last year.

Rental inflation ranges from a low of 1.1 per cent in London to 6.3 per cent in the North East and nine per cent in Northern Ireland. The growth in rents has slowed most rapidly in London, Scotland and the East Midlands over the last year, due to the number of homes available to rent increasing and affordability pressures.

 

Table 3: Rental inflation has slowed across UK and cities

 

Rents are falling by -1.2 per cent in Nottingham, highlighting how localised changes in supply and demand can shape the trajectory of rents.

However, rents continue to rise more quickly in smaller cities where affordability is less of a constraint on rental growth, for example Blackburn (10.1 percent), Stoke (9.8 per cent) and Rochdale (9.6 percent).

 

Table 4: More affordable cities where rents are rising fastest

City region

Rent inflation last 12 months

Current rent £pcm

Rent growth last 3 years

Rent growth last 5 years

Blackburn

10.1%

£735

30.8%

48.2%

Stoke

9.8%

£797

30%

43.3%

Rochdale

9.5%

£881

37.2%

57.3%

Belfast

9.2%

£819

18.7%

34.9%

Birkenhead

8.3%

£778

26.1%

41.2%

Burnley

8%

£620

27%

48%

Wakefield

7.9%

£787

25.3%

43.4%

Bolton

7.9%

£869

33.9%

54.6%

Wigan

7.7%

£798

32.8%

54.1%

Newport

7.2%

£930

27.6%

51.2%

Grimsby

6.8%

£655

20.2%

33.1%

 

Commenting on the latest report, Richard Donnell, Executive Director at Zoopla said:

“Rents are rising more slowly than average earnings, which will be welcome news for renters after three years where rents have risen rapidly. Affordability remains the primary constraint on rental inflation rather than increased supply and greater choice of homes for rent. 

“We expect demand for rented homes to continue to exceed available supply in 2025, keeping a steady upward pressure on rents. The overall stock of private rented homes is unlikely to increase in size in the coming years due to rental reforms and policy changes impacting levels of new investment. It’s important that reforms in the private rented sector are designed and rolled out to minimise the negative impacts on available supply, which hit those with lower incomes hardest.

“We expect rents to increase by three to four per cent over 2025 as slower growth in large cities is offset by faster growth in more affordable markets.” 

EAN Breaking News

Breaking News from the team at Estate Agent Networking. Have a new story to share with us? Then please get in contact today! When and where we can we will refer to third party websites with a 'live link back' where news was released first.

You May Also Enjoy

Rightmove logo
Breaking News

Ten years on: More first-time buyers moving to cities while the coast stands still

New ten-year analysis of the property market shows that more first-time buyers are looking to move to cities, while the coast has seen no growth in new buyers First-time buyer demand to move to Great Britain’s 50 largest cities (excluding London) is up by 16% on average over the last ten years, with Dundee topping…
Read More
Breaking News

Homeowners in England and Wales overvalue their properties by an average of 16%

Homeowners in England and Wales are overestimating the value of their property by an average of 16%, according to new figures. Data from Quick Move Now compares homeowner estimates with formal estate agent valuations and is broken down by both region and property type. Overall, homeowners overvalue in every single category.   Regional breakdown Region…
Read More
Visual blemishes on Roads due to service upgrades
Estate Agent Talk

Emergency Sidewalk Repairs: When to Act and Who to Call

Sidewalks are the unsung heroes of city infrastructure—quietly assisting tens of millions of footsteps every day. But when they crack, disintegrate, or shift all of sudden, they might quickly turn out to be volatile liabilities. In a town like New York, in which pedestrian site visitors are constant and belongings proprietors are legally chargeable for…
Read More
Breaking News

Reapit report reveals agents’ long-term market confidence amid legislative challenges

Despite the significant challenges posed by a shifting economic landscape and the largest wave of housing legislation in decades, estate and letting agents remain steadfast in their confidence about their long-term future in the industry. According to the first Reapit Property Outlook Report 2025, covering the full breadth of sales and lettings agency opinion countrywide,…
Read More
Breaking News

Owner-Occupiers Drive Resilient Commercial Property Market

Buying Becomes 37% Cheaper Than Renting The latest Commercial Property Demand Index from specialist property finance expert, Rangewell, reveals that while investor appetite across the sector held steady in Q2, strong levels of owner-occupied commercial mortgage activity are helping drive market performance, as business owners increasingly move from renting to buying their long-term premises for…
Read More
Breaking News

One year of Labour: Property market performance review

Investors left waiting for planning reform and incentives but majority plan to increase real estate allocation   Biggest failures: Lack of incentives for developers and investors, and ineffective planning reform Top priorities: Planning reform, tax incentives, and attracting international capital Where opportunities lie: Data centres, warehousing & logistics, and later-life housing Real estate debt is…
Read More