The Office for National Statistics (ONS) update showed the annual rate of growth was slightly down on the rate of 3.6% seen in February. It was also the lowest annual inflation rate recorded since March 2022.
The largest rise in average rent was seen in Northern Ireland, where data is only collected up to January, and showed a 5% year-on-year increase to £880.
This was followed by Wales, where average rents increased 4.8% to £830 per month, and England, with a 3.4% uplift to £1,434.
Scotland had the smallest annual rise, with rents increasing 2.1% to £1,022 per month in March.
The inflation rate had slowed across all four nations.
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Within England, the North East continued to have the highest annual rent inflation, rising 6.5% to £772 per month. This rise was lower than the 7.6% recorded in the year to February and the region continued to have the lowest average rent.
By contrast, average rents in London were the highest at £2,280 per month, but the annual growth was the lowest at 1.7%. This was flat on the rate recorded in the 12 months to February.
Rent costs by property size and type
Detached rental homes attracted the highest average rent at £1,569, and the lowest was for flats and maisonettes, averaging £1,345.
The highest rent was applied to homes with four or more bedrooms, at £2,049 per month on average, while smaller one-bed rental homes had an average rent of £1,117 per month in March.
Falling landlord confidence prompts exits, adding pressure on supply
Tom Bill, head of UK residential research at Knight Frank, said that although the growth in rents had been falling, the “Renters’ Rights Act could increase upwards pressure on rents as landlords mitigate higher risks around repossessing their property or guaranteeing rental income”.
He added: “Any further reduction in supply as landlords sell up could also increase the financial squeeze on tenants.”
Alex Upton, managing director for specialist mortgages and bridging finance at Hampshire Trust Bank (HTB), said while rental growth had slowed, the “underlying pressure has not gone away”.
She said: “Demand continues to outstrip supply in many parts of the market, particularly for well-located and better-quality stock, and that imbalance is likely to persist while delivery of new housing remains below what is needed.”
Upton said what had changed was landlord confidence, adding: “Expansion is no longer the default response to rising demand. Investors are becoming more selective and more deliberate in how they deploy capital.”
She said landlords were not more focused on resilience, refining portfolios, strengthening income and pivoting to assets that could perform more consistently as regulation and costs changed.
“That shift is reshaping funding requirements. Landlords are not simply adding new properties, they are restructuring. This includes releasing capital selectively, consolidating borrowing and repositioning portfolios to reflect changing margins and longer-term strategy, often through more complex, transitional transactions,” Upton added.
Nathan Emerson, CEO of Propertymark, said: “Rising rental prices continue to reflect the chronic imbalance between supply and demand in the private rented sector. Letting agents across the UK are consistently reporting high tenant demand alongside a shortage of available properties, which is inevitably placing upward pressure on rents.”
Emerson said this was not a short-term trend, but reflected “years of underinvestment in the sector” and growing regulatory pressures that discouraged landlords from entering or remaining in the sector.
He added: “If rents are to stabilise, measures that support supply must be prioritised, including support for landlords and a regulatory environment that encourages long-term investment. Without this, affordability challenges for tenants will likely only intensify.”
