Rents across Great Britain are finally showing signs of cooling after years of relentless growth and finally offering tenants some welcome relief just as wider living costs head higher.
According to the latest Hamptons Lettings Index, newly agreed rents fell by 0.4% year-on-year in August 2025 to an average of £1,387 per month.
That equates to £6 less each month and marks the largest post-Covid fall in rents, as well as the joint second-biggest decline since records began in 2011.
The capital is leading the downturn with inner London rents now 5.8% lower than a year ago, with four regions in total registering negative growth. In fact, average rents in the capital are £179 below their October 2024 peak. Yorkshire & Humber and the North East also recorded their first annual declines since before the pandemic.
SLOWDOWN AFTER GROWTH
Over the past decade, the average rent has risen 41% compared with 33.7% for the Consumer Price Index (CPI). Over five years, rents are up 31% compared with a 24.9% rise in CPI.
Source: Hamptons
Had rents simply tracked inflation, tenants today would be paying £1,308 per month – saving £952 a year. Over ten years, the gap widens to £1,611 annually.
Interestingly, rents have now underperformed inflation for nine consecutive months, which is starting to take some pressure off the headline CPI rate.
The ONS estimates that private rents account for 8.1% of CPI, while overall housing costs represent almost a quarter of the 3.8% July inflation figure.
RENEWALS
Tenants who stayed put saw rents rise 4.3% in the year to August, leaving the average renewal £90 a month cheaper than moving into a new property. The gap is still far wider than the £10–20 norm before Covid, though it has narrowed from the £170 peak recorded in late 2023.
Behind the numbers, the balance of supply and demand is shifting. The number of homes available to rent in August was up 8% year-on-year, while tenant demand slipped 4%. Stock levels are still lower than before the pandemic, but the gap is narrowing fast – suggesting affordability pressures and cooling demand could keep rental growth subdued into 2026.
KEY INFLATION CONTRIBUTOR
Aneisha Beveridge, Head of Research at Hamptons, says: “For most of the last five years, rapidly rising rents were a key contributor to the UK’s high inflation story.
“But after several years of rapid rental growth, the tide is finally turning. For the ninth month in a row, rents have risen more slowly than inflation – offering tenants a rare moment of financial respite.
“While the monthly savings may seem modest, they mark a significant shift in the rental market’s role in driving inflation.
AFFORDABILITY STRETCH
And she adds: “Over the longer term, rents have consistently outpaced inflation, which means tenants today are paying more than they would have if rents had simply tracked CPI.
“For the most part, this has mirrored the rising cost pressures facing landlords. But this recent slowdown suggests the market is recalibrating. With affordability stretched and demand softening, landlords are having to adjust to attract tenants.
“Like wages, rents don’t often fall. In fact, there have only been six months over the last 14 years when rents have fallen nationally on an annual basis.
“And when they do, it’s usually in real terms, rather than absolute terms. What we’re seeing now is a real terms fall in rents – when inflation and wages outpace rental growth – which leaves tenants feeling better off. It’s a sign that the rental market is responding to wider economic pressures, and it could help ease the inflation headache for policymakers in the months ahead.”
