Rents are rising at their slowest pace since August 2021 as the gap between demand and the supply of empty homes narrows and affordability pressures take their toll on tenants.
Rental growth in the 12 months to October has slowed to 3.9% down from 9.1% a year ago, according to Zoopla’s Rental Market Report. Growth is expected to remain at 4% over 2025.
Easing the pace of rental inflation is a 29% drop in tenant demand in the four weeks to December compared to same period last year while supply has risen by 12% year-on-year.
Growing affordability pressures are also a key factor behind slower rental growth.
The ongoing rise in rents has added £3,200, or 27%, to the average private renter’s annual housing costs over the last three years, which currently stand at £15,240, outpacing growth of earnings of 19% over the same period.
Cheaper rental areas see biggest rises
Rents are outpacing the average rate of rental inflation in those markets with lower rental values and areas in the lower end of the rental market in major cities.
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Rochdale and Blackburn, for example, have seen rental growth of 11.9% and 10% respectively in the 12 months to October. Burney, Newcastle and Birkenhead have all experience rent rises of between 8.7% and 9% over the same period.
In London, rents are 3% to 6% higher than last year in cheaper areas of outer London, led by Havering (5.9%) and Barking and Dagenham (5.2%). Rental growth is less than 1% in inner London areas, led by Tower Hamlets (0.3%), Greenwich (0.5%) and Kensington & Chelsea (0.8%).
Richard Donnell (pictured), executive director at Zoopla, said: “Private renters moving home have faced rents rising faster than earnings over the last three years. The number of rented homes hasn’t grown since 2016 creating scarcity for renters at a time when demand has boomed on a strong labour market and the rising cost of home ownership. Rental growth has slowed but we expect an ongoing lack of rental supply to keep an upward pressure on rents.
“The ambitions to expand home building are important as the quickest way to ease the pressure on renters is to boost the supply of private and social rented homes. Private landlords will continue to play an important role and should be encouraged to remain in the market.”
