Industry report shows first rental fall in 5 years

The average private property rent in the UK has fallen for the first time since August 2020, says a new report from Hamptons.

Rents for new tenancies fell 0.2% year on year in July, taking the average to £1,373. However, tenants renewing their contracts weren’t so lucky, with an average rent increase of 4.5%.

Hamptons says that falling interest rates have reduced landlords’ borrowing costs, so they are under less pressure to pass on rent increases to tenants. Lower borrowing costs have also made it easier for tenants to become homeowners, reducing demand for rented homes.

In June, the agency reported that demand for rental homes had fallen 11% in the first half of the year compared to the same period in 2024, while first-time buyers made up a record 33% of all home purchases.

As a result, they downgraded their growth forecast for the year sharply from 4.5% to 1.0%, and have also reduced forecasts for the next two years.

Is the rental market really declining?

Other rental market reports haven’t shown average rents falling. The HomeLet Rental Index for July showed a 0.4% year-on-year increase nationally. Rightmove hasn’t yet released stats for July, but its Q2 data shows year-on-year growth of 3.9% for the quarter. The Office for National Statistics found a 5.9% increase in private rents in the year to July, well above private sector reports.

In the Hamptons data, different regions performed differently, which may be a clue about the disparity. Greater London suffered the biggest fall at 3%, while rents also fell in the North East, Yorkshire and Wales, but 7 out of 11 regions still had positive year-on-year rental growth. The fall in national rental growth in their data may be because they cover a lot of London properties.

London rents also fell year on year in HomeLet’s report, although only by 0.9%, and rose by a sluggish 0.5% in Rightmove’s. In both cases, the capital has the weakest rental growth of any UK region.  

All the indices also agree that rental growth is slowing down, thanks in part to the abovementioned rebalancing of supply and demand. Alongside Hamptons’ report of falling demand, Rightmove also reported that the average rental property now gets only 11 enquiries per rental listing, down from 16 last year.