UK Rental Market in Q4 2025: A Turning Point Towards Balance

2026-01-16

Industry News

The latest Rightmove Rental Trends Tracker for Q4 2025 shows that the UK rental market is moving into a more balanced phase after several years of intense demand and rising rents. While rental costs continued to edge higher in 2025 overall, quarterly figures tell a story of cooling growth and signs that competition between tenants is easing.

Rents: Growth Slows, but Still Positive Over the Year

Across the UK excluding London, the average advertised rent for homes coming onto the market in October–December 2025 was £1,370 per calendar month. This represented a 1.1% fall in the quarter — only the second quarterly drop in the last five years. Over the full year, rents outside London still climbed 2.2% compared to 2024 — the lowest annual rise at the end of a year since 2018.

London followed a similar pattern: average rents in the capital fell 0.7% in Q4 to £2,716 per month, but still showed a 0.8% annual increase — the slowest year-on-year growth since 2020, a period impacted by the pandemic.

This moderation reflects a market that is settling down after years of rapid rises and fiercely competitive conditions.

Shifting Market Dynamics: Demand, Supply, and Competition

One of the most encouraging trends highlighted in the report is the improving balance between supply and demand:

• In 2025, there were on average 10 enquiries for every available rental home — still above pre-pandemic levels (around six) but significantly lower than 2024’s figure of 14 enquiries per property.
• The number of rental homes available was 9% higher than a year ago, even though it remains 33% lower than a decade ago.

These shifts show that the market is no longer as intensely oversubscribed as in recent years, giving tenants slightly more breathing space and making the process of securing a property less frantic.

Another positive indicator is improved landlord investment sentiment. Buy-to-let mortgage affordability improved for investors in 2025, with the average two-year mortgage rate for a typical landlord falling to around 4.84% — down from 5.51% the prior year. This could support more landlords entering or remaining in the market, helping long-term rental supply.

Regional Variations: Who’s Growing Most — and Least?

The rental picture still varies across the UK:

• North West and Scotland saw the strongest rental demand, with around 16 enquiries per property on average — more than double London’s figure.
• In terms of annual rent growth, the North West (+3.6%) and Yorkshire & The Humber (+3.1%) led the regions, while the North East (+0.4%) and London (+0.8%) recorded the slowest increases.

This reflects a broader trend seen throughout 2025: growth is more modest in high-cost areas like London, while some regions with traditionally lower rents are seeing stronger percentage gains.

What’s Ahead in 2026? Measured Growth Expected

Looking forward, Rightmove forecasts that average rents will rise by around 2% during 2026. Although rental levels remain historically high, the expectation is for sustained but measured growth rather than sharp jumps.

Market commentators often point to improvements in supply and cooling demand as key reasons for this moderation, as well as external factors like changes in mortgage costs and broader economic conditions.

What This Means for Renters and Landlords

For Renters:

• The market is less cut-throat than in previous years, with more properties available and fewer applicants per listing.
• Rents are still rising on an annual basis but at slower rates, giving tenants slightly more predictability when planning their budgets.

For Landlords:

• Improved buy-to-let mortgage costs may support continued investment.
• A more balanced market means landlords may need to focus on pricing and property presentation to remain competitive.

In Summary

The Q4 2025 Rental Trends Tracker highlights a rental market that is gradually finding its footing after years of intense pressure:

• Annual rent growth slowed — the lowest in several years.
• Quarterly rents even dipped slightly in the late 2025 data.
• Supply is improving, and tenant competition is easing.
• Strong regional differences persist, but the overall trend is toward stability rather than sharp volatility.

As we move into 2026, the rental market looks set for measured growth and a more balanced dynamic between tenants and landlords — a gradual shift that both sides of the market are likely to welcome.

Source: Rightmove