Rents fall yearly for first time in 15 years: Typical new tenant now pays £10 much less a month

Rents ended 2025 below where they started for the first time on record, according to the latest figures from Hamptons.

Newly agreed rents dipped by 0.7 per cent in 2025 – the first time rents fell over a full calendar year since the estate agent’s records began in 2011. 

The figures are based on rental data from across the Connells Group, which comprises more than 57,000 homes let each year and more than 66,000 renewed contracts and is based on achieved rather than advertised rents.

The annual fall means the average tenant moving into a property in December paid £10 a month less than last year for the same home.

It follows on from similar findings from Rightmove, which this week reported that the average advertised rent for homes outside of London fell 1.1 per cent in the final three months of last year to £1,370 per month.

In recent years it seemed that the only way was up for rents with too few properties available and too many renters competing over them. 

However, the rental demand and supply imbalance of recent years seems to be reversing at quite a pace and this could lead rents to fall in some areas.

The average number of homes being put up for rent each month rose from 99,739 in 2024 to 108,348 per month in 2025, according to the estate agent membership body Propertymark.

Similar to Hamptons, it says the rent agreed by tenants also fell from £1,511 a month in 2024 to £1,505 a month in 2025.

Why are rents falling?

A sharp decline in net migration could be causing less competition for rental homes and therefore helping prices to ease off in some areas.

The Office for National Statistics estimates that net migration has fallen to 204,000 in the year to June 2025, down from a high of 944,000 in the year to March 2023.

The fall is driven by fewer non-european nationals arriving for work- and study-related reasons and a continued, gradual increase in levels of emigration (people leaving Britain).  

In fact, both European and British national groups saw more people leave the UK than arrive in the 12 months to June, according to the ONS.

Another factor is that mortgage rates have been falling and some banks are willing to lend larger sums to first-time buyers.

This has boosted demand to buy homes and removed some would-be tenants from the rental market.

‘What we are seeing is a gradual shift rather than a sudden change in the rental market,’ says Allison Thompson, national lettings managing director at Leaders.

‘Rents are easing in some areas because demand has softened from the exceptionally high levels of the past few years, and supply has become slightly more visible. 

‘Net migration has slowed, and more first-time buyers have been able to step onto the ladder, which naturally reduces pressure on the rental sector.’

There is also something interesting happening with younger people – while this is harder to quantify – it seems there is an increasing tendency for people in their twenties to continue living with parents rather than rent with friends or a partner.

Aneisha Beveridge, head of research at Hamptons says: ‘Fewer tenants are taking their first step into the rental market, with many staying at home longer and being reluctant to commit to the cost of renting a place of their own.’

Allison Thompson of Leaders also says she has noticed these behavioural shifts starting to influence demand. 

‘While this is not yet something we can point to with definitive data, there is some anecdotal evidence that some people in their twenties are delaying independent renting and staying in the family home for longer,’ says Thompson.

But fewer renters is only part of the story. There are also plenty of rental homes available, which also helps to keep prices somewhat in check.

The number of rental homes ended the year 6 per cent higher than in December 2024, according to Hamptons.

It says the number of homes available to rent is currently only 8 per cent below 2019 levels. 

During the post-Covid boom, when rents were rising by double-digits, the number of homes on the rental market fell 52 per cent below 2019 levels. 

Hamptons says that December’s increase in stock primarily reflects weaker demand from renters rather than a jump in new landlord purchases. 

Allison Thompson thinks there are likely a mix of factors at play on the supply side. 

She says: ‘Some landlords are holding onto properties rather than selling into a subdued sales market, while we are also seeing some short-term lets return to the long-term rental sector. 

‘Taken together, these shifts help explain why rents are levelling off in certain areas, without suggesting the underlying pressures in the rental market have disappeared.

‘At the same time, more homes are coming onto the market or taking longer to let, which can give the impression of a surplus, even though overall supply remains tight by historic standards. 

‘This is really about an imbalance easing, not a market suddenly becoming oversupplied.’

Where are rents falling?

Newly agreed rents first began falling in London in January 2025, but by the end of the year, a number of other regions were recording rent falls.

London recorded the largest falls in newly agreed rents, down 2.7 per cent, the equivalent of £63 per month over 2025, taking rents back to June 2023 levels. 

However, by December, rents also fell 1 per cent in the South East, 0.2 per cent in the East Midlands, 1.4 per cent in Yorkshire and Humber and 0.8 per cent in Wales.

Meanwhile, rents in the East of England, the South West and in Scotland saw growth below 1 per cent in 2025. 

Their current trajectory suggests that these regions could tip into recording falls in early 2026, according to Hamptons. 

Why rents could start rising again by the end of 2026  

The attractiveness of buy-to-let as an investment looks to be on the wane.

Landlord activity continued to slide in 2025, with just 10.9 per cent of properties in the UK bought by landlords, down from 12 per cent in 2024 and well below the 15.8 per cent recorded in 2015, before the 3 per cent stamp duty surcharge was first introduced in 2016. 

This year marks the lowest share since Hamptons’ records began in 2012 and the first time it has fallen below 11 per cent over a full calendar year. 

The decline comes during the first full year in which landlords paid the higher 5 per cent stamp duty surcharge. 

Fewer landlords buying up properties is a trend that looks set to continue amid higher taxation and increased regulation. 

The Renters’ Rights Act, which comes into force on 1 May, will give tenants the greatest increase to their rights in a generation – with landlords facing fines of up to £40,000 if they fall foul of the new rules.

Landlords also face a major tax shake-up that is set to overhaul how they report their income and expenses to His Majesty’s Revenue & Customs. 

Aneisha Beveridge of Hamptons adds: ‘Towards the back end of the year, it’s possible the implementation of the Renters’ Rights Act may start proving inflationary for agreed rents. 

‘If landlords start to find the procedural and legal machinery underpinning the new rules lacking, it is likely to slowly squeeze rental homes out of the market. 

‘From a supply perspective, the lack of appetite means the share of homes bought by investors could fall below 2025’s already low levels.’

If investor appetite contines to dry up as Beveridge suggests, then as per the rules of demand and supply; fewer rental homes will likely translate into renting rising again.