After years of rising rental costs, renters are finally starting to see signs of relief. According to new data released by property portal Zoopla, annual rent inflation slowed to 3.9 percent, its lowest rate since August 2021.
Although rents are still rising, this represents a significant decline from the 2022 growth peak of 12 per cent.
For the average renter, who now pays £1,270 a month for a typical rented home, the slow price increases come as welcome news. Over the past four years, rents have risen by 27 percent while profits have grown by only 19 percent. Compared to 2021, renters are paying a whopping £3,240 more per year on average.
The rate of rent growth varies across the country. Northern Ireland remains a hotspot, with annual rents rising by 10.5 per cent, while London rental prices rose by just 1.2 per cent last year. These regional differences highlight how location and local market conditions affect affordability.
Richard Donnell, CEO at Zoopla, points out that the pandemic-era rental boom stems from an imbalance between supply and demand. While there are nearly a third fewer potential renters searching for housing than in 2019, the inventory of available rental homes has remained broadly flat since 2016. The shortage is expected to persist, though to ease slightly. Potential buyers are locked out of the housing market due to affordability issues, net migration has reached record levels, and more landlords are exiting the sector in response to tougher taxes and regulations.
Zoopla expects rents to rise by a further 4 per cent in 2025, with more affordable areas around major towns and cities likely to see the strongest demand. This is already evident in places like Havering, on London’s eastern edge, and Birkenhead, across the Mersey from Liverpool, where rents are outpacing more expensive urban areas.
Labour’s pledge to build 1.5 million homes over the next five years could help alleviate chronic shortages and keep rents and prices in check. However, Donnell warns that real relief in pressure on renters must come from boosting all forms of housing supply, both private and social. He says landlords will still be needed to meet demand, and conditions may eventually encourage them to return to the market – but not yet.