Rents have stalled at the start of the year for the first time in nearly a decade as supply and demand in the lettings market begin to rebalance.
Data from Rightmove shows average advertised rents outside London remained unchanged in Q1 2026 at £1,370 per month, marking the first time since 2017 that rents have not risen between Q4 and Q1.
Despite the pause, rents are still 1.6% higher year-on-year, although this represents the slowest annual growth since 2018.
In London, rents continued to rise, increasing by 0.7% over the quarter to £2,736 per month, with Inner London reaching £3,229 and Outer London £2,375.
IMPROVING SUPPLY
The shift reflects improving supply, with the number of available rental homes up 3% year-on-year and at its highest level for this time of year since 2021.
Tenant demand has also eased, with the average property receiving eight enquiries, down from 11 a year ago and well below the 2022 peak of 29.
Price sensitivity is also increasing, with 26% of rental listings seeing reductions – the highest proportion recorded since Rightmove began tracking the metric in 2012.
STRETCHED AFFORDABILITY
Colleen Babcock (main picture, inset), Property Expert at Rightmove, says: “Rents holding steady this quarter reflects how affordability remains stretched, but also how supply and demand is more balanced.
“With more homes available to rent and less competition between tenants, landlords are needing to position rents correctly for the current market to secure a tenant.
“As market conditions rebalance, homes are taking longer to let. The market is more price sensitive, with landlords needing to be realistic from the outset to secure a tenant and reduce the risk of void periods.
“Around 26% of rental listings are now reduced in price while advertised, the highest proportion recorded since Rightmove began tracking this metric in 2012.”
CAUTIOUS BEHAVIOUR
She adds: “Ahead of the Renters’ Rights Act coming into force, the data doesn’t suggest a single or immediate reaction from landlords. Instead, behaviour appears more cautious and considered, with many focusing on long-term tenancies, pricing and avoiding void periods in a more balanced market.
“It’s still early days, but the most immediate shift due to the war in Iran has been some significant increases to borrowing costs for landlords, which may filter through to the market at a later stage.”
COST OF LIVING
Jeremy Leaf, north London estate agent and a former RICS Residential Chairman, says: “Rental market activity has been in transition for a while now with issues exacerbated – but not necessarily caused – by war in the Middle East.
“For instance, tenants were becoming increasingly concerned about the rising cost of living beforehand but are even more so now.
“Also, we were seeing aspiring first-time buyers trying to take advantage of salaries rising faster than house prices and easing affordability criteria. However, worries about the pace of mortgage rate increases in particular have encouraged more to stay put.
“Meanwhile, the choice of property available is dwindling as landlords continue to leave the sector in anticipation of the imminent Renters’ Rights Act and taxation changes. There’s been a reluctance too for new investors to take their place partly due to uncertainty about the economy.
“The net result is a market ‘on hold’ with fewer transactions and rents not moving much one way or the other – probably until some stability returns.”
