Zoopla says rental growth has stalled.
It claims agents are now receiving 24% fewer enquiries from prospective tenants compared to a year ago. Tighter visa rules have led to migration levels almost halving in 2024 and more stable mortgage rates, and rising incomes are encouraging more renters to buy their own homes.
As a result rents are just 2.4% higher than a year ago, the slowest in four years and less than half the pace just 12 months ago.
The average monthly rent now stands at £1,300pcm, up £30 over the last year.
This shift was significantly boosted in the first quarter of 2025 when changes to how mortgage affordability is assessed gave first-time buyers a 20% boost to their borrowing capacity. This change has led to a 30% jump in first-time buyer mortgages over the last year, which is weakening demand for rentals and adding more homes to the market as these buyers move out of rented properties.
The number of homes available to rent has increased by 19% over the last 12 months, with the average letting agent having 19 homes for rent, up from a low of 14 in 2022.
This change is driven by several factors.
A 36% jump in UK rents since 2020 has made it more attractive for landlords to invest in new buy-to-let properties, with new loans for these purchases up 60%.
At the same time, improving conditions in the mortgage market are helping more first-time buyers move into homeownership, freeing up their old rental homes. With more choice and less competition, homes are now staying on the market for an average of 16 days, giving tenants more time to find the right property.
The number of homes for rent is higher across all regions than a year ago, especially in the South West and East Midlands where supply has risen by 36 and 31%respectively.
Zoopla says it’s likely that homeowners who are struggling to sell in these regions are choosing to rent out their properties instead, further boosting the number of available homes.
This is giving renters more options and reducing the pressure to settle for the first home they see.
Overall the portal suggests that rental market conditions are starting to normalise after a frantic few years characterised by many renters chasing too few homes as landlords held back from investing in more stock, which in turn pushed rents higher.
Supply and demand are coming back into balance, but the unaffordability of home ownership is trapping people in private renting in many areas, which is keeping rental demand above pre-pandemic levels.
Rental growth is on track to be three per cent over 2025.
Richard Donnell, Executive Director at Zoopla says: “Lower migration and better mortgage availability for first time buyers are easing the scale of the competition for rented homes. There is also more choice for renters with more homes for rent as landlords start to buy homes once again and some owners who can’t find a buyer listing their homes for rent. The affordability of renting remains a key constraint on the pace of future rental inflation and we expect rents to be 3% higher by the end of the year at an average of £1,320 a month.”
This article is taken from Landlord Today