According to the Hamptons Lettings Index, which records rental prices in England, Wales and Scotland, August’s drop marks the second-largest annual decline since Hamptons’ index began in March 2011.
The agent said it was a sign that the rental market was “responding to wider economic pressures”, as rents had only fallen nationally in six months of the last 14 years.
London leads the regional declines, with Inner London rents down 5.8% year-on-year and four regions now seeing negative rental growth.
However, this recent slowdown comes after a prolonged period of rapid rental growth.
Over the last five years, the cost of a newly agreed let in Great Britain has risen by 31%.
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The average cost to a tenant of renewing their rental contract rose by 4.3% in the year to August 2025, leaving the monthly cost of renewing a tenancy £90 per month cheaper than moving into a new property.
Regional rent performance
Rents are now falling in four of the 11 regions of Great Britain.
London, where rents have been decreasing on an annual basis in each of the last eight months, recorded the steepest falls at 3.3%.
Inner London rents have fallen by 5.8% over the last 12 months, marking the largest decline since May 2021 – £179 per month below their October 2024 peak and 1.3% below where they were two years ago.
Yorkshire and the Humber and the North East also saw annual declines of 0.5% and 0.2% respectively. This was the first time a decrease in the cost of newly agreed lets had been recorded in Yorkshire and the Humber since November 2019, while it was February 2020 for the North East.
Rental growth in other regions remained in positive territory, despite the rate of growth slowing.
Rents outpace inflation over long term
When tracked over five and 10 years, rents have risen faster than inflation, as measured by the Consumer Prices Index (CPI) – up 31% compared to 24.9% inflation over five years and rising by 41% compared to 33.7% over the past decade.
According to the agent’s analysis, had rents tracked inflation – currently at 3.8% – over the last five years, the average tenant would now be paying £1,308 per month – saving £952 annually.
Over a 10-year horizon, rents would stand at £1,253 per month, representing an annual saving of £1,611.
Rising rents were one of the fastest increasing elements of CPI during 2022 and 2023 but are now set to put downwards pressure on the headline inflation rate.
According to the Office for National Statistics (ONS), changes in private rents account for 8.1% of the headline CPI figure.
Aneisha Beveridge, head of research at Hamptons, said: “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.”
Beveridge said that with affordability stretched and demand softening, landlords are having to adjust pricing to attract tenants.
She added: “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.”
