Competition for rented homes across the UK has fallen to its lowest level in six years as supply improves and demand softens according to the latest rental market report from Zoopla.
The report shows the number of enquiries per rental property has dropped to 4.8, down from 6.5 a year earlier, reflecting a significant easing in pressure across the lettings market.
Demand from renters has fallen 14% year-on-year, while the number of homes available to rent has increased 11% over the same period.
As a result, the pace of rental growth has slowed, with rents for new lets rising by 1.9% over the past year, compared with 2.8% a year earlier.
SUPPLY AND DEMAND BALANCE
The improved balance between supply and demand means rental properties are also taking longer to let. On average, it now takes around 20 days to secure a tenant, compared with 13 days during the peak of competition in 2022.
Several factors are contributing to the shift. A stronger mortgage market has helped more renters move into homeownership, while lower levels of inward migration have reduced demand for rental homes.
Data from the Office for National Statistics shows net migration peaked at 944,000 in the year to March 2023 before falling to 204,000 in the year to June 2025.
IMPROVED RENTAL AFFORDABILITY
Rental affordability has also improved slightly as earnings have risen faster than rents for the past 18 months. Outside London, the average annual rent now accounts for 33.5% of a single person’s gross income, down from a peak of 35% in 2023.
However, rental growth varies significantly across the country. Northern cities continue to see stronger increases, with rents rising 4.6% in Liverpool and 4.5% in Newcastle.
In contrast, several markets across the Midlands and southern England have seen weaker growth or even falls, including Birmingham (-0.7%) and Nottingham (-0.8%), while rents in London have grown by 1.7%, with the average now reaching £2,187 per month.
LESS COMPETITION FOR HOMES
Richard Donnell (main picture, inset), says: “Market conditions for renters are the best they have been for six years. The rental market is moving back towards balance as demand cools and more homes become available to rent.
“Renters are facing less competition for homes and slower rent increases than in recent years. Localised changes in demand and supply are resulting in rents falling in some cities but this will be only a short lived trend.
“The rental market is moving back towards balance as demand cools and more homes become available to rent. Renters are facing less competition for homes and slower rent increases than in recent years.
“However, supply remains well below pre-pandemic levels, which means increasing the number of rental homes remains key to improving affordability for the UK renters over the long term.”
BIG CHANGES
Nathan Emerson, CEO of Propertymark, says: “The rental market continues to bring challenges that are tightly aligned to both fundamental economic pressures and new influence from updated legislation.
“We are witnessing some of the biggest changes in well over 30 years, with the introduction of additional consumer protections, plus a modified taxation framework for landlords.
“We currently have a rental landscape where demand for properties continues to outstrip available stock.
“Any reported uplift regarding additional rental properties being available must closely acknowledge the scenario of there still being intense pressure on supply.
“In addition, when looking at the latest data available, Propertymark members report a near 7% increase in the number of landlords who have chosen to sell their properties year on year.”
MIXED PICTURE
Harry Watts, Lettings Director at London agent Douglas & Gordon, says: “We’re seeing a more mixed picture on the ground in Central and South West London.
“While the market has become more balanced compared with the 2022–23 peak, applicant registrations are still up 18% so far this year versus the same period last year, which points to continued underlying demand for well located, good quality homes.
“At the same time, as we move closer to the Renters Reform Act, we’re seeing more tenants being asked to move at points in the year when they would not typically expect it. In many cases, this appears linked to landlords reassessing their position and, in some instances, choosing to sell, which is becoming more prevalent.
“And even where rental growth is cooling, there is a clear affordability ceiling. Over the past couple of years, tenant incomes have struggled to keep pace with pricing, so correctly priced homes let well, while anything ambitious is taking longer and facing sharper negotiation.”
NOTABLE LACK OF SUPPLY
Tom Bill, Head of UK Residential Research at Knight Frank, says: “More balance has returned across the UK but in the capital, where renting is twice as common, there is still a notable lack of supply in many areas that is pushing rents higher.
“Some landlords have already sold due to extra red tape and taxes while others are waiting to see how disruptive the Renters Rights Act is when it comes into force in May.
“With tougher green regulations also coming down the line, further upwards pressure on rents cannot be ruled out.”
RENTERS’ RIGHTS ACT LOOMING
Jeremy Leaf, north London estate agent and a former RICS Residential Chairman, says: “Conditions for letting property are favourable at present given the level of stock being sold and demand remaining strong in most areas, so many longer-term landlords are taking advantage.
“However, the reason why many are leaving the sector is the looming Renters’ Rights Act which is due to become law on 1 May. Landlords will then find regaining possession is likely to prove more difficult – they will have to wait over a year if they want to re-let to prevent back-door evictions, they won’t be able to increase the rent more than once a year and then subject to review, as well as stricter penalties, to name but a few changes.
“As a result, an increasing proportion of landlords are not renewing agreements and trying to sell despite the attraction of higher rents and yields.
“We’re finding many of those staying put are increasing rents to market levels while they can but ensuring references, guarantees and insurance are up to speed as well as instructing qualified agents to reduce the risk of problems arising.
“Even those with tenants who have proved reliable in the past appreciate circumstances change and nothing stays the same.”
BUSY TIME FOR TENANTS
Gary Howorth, Regional Sales Director at Chestertons, says: “More first-time buyers have taken the step towards home ownership this year. In some parts of the UK, including some areas of London, this has weakened demand for rental properties.
“Remaining tenants looking to move now benefit from a larger pool of properties to choose from but we will likely see the market turn and demand go up again as we enter spring; a particularly busy time for tenants looking to move.”
