London rents also achieved a 15th consecutive new record of £2,712 per month this quarter, analysis of the rental market by Rightmove revealed.
But an improvement in the balance between tenant demand and the supply of available homes to rent has cooled the pace of rental inflation.
Although average asking rents for a home outside of London are now 3.9% higher than this time last year, this is the lowest annual growth figure since 2020. In Q1, rents were 4.5% higher than the previous year.
New tenants are paying over £400 more per month in rent on average five years on from the pandemic, outpacing the increase in average earnings over the same period, which have risen by 36%.
However, much of this growth in rents occurred during the pandemic years of 2021 and 2022. Since 2023, yearly rent rises have been gradually slowing.
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Supply and demand in rental market rebalances
According to Rightmove’s Rental Market Index, the market has the best balance between supply and demand since 2020, as activity continues to cool and recalibrate after the pandemic years.
The number of available properties to rent is now 15% higher than at this time last year, while the number of prospective tenants looking to move is 10% lower.
This rebalance of supply and demand means that the average number of enquiries a typical rental property receives is now 11, down from 16 last year – but up from seven at this time in 2019.
Homes are taking longer to let, with the average timescale stretching out from 21 to 25 days over the last 12 months, while nearly a quarter of listed rents have been reduced during advertising – the highest this figure has been since 2017.
Furthermore, UK Finance reported that new buy-to-let (BTL) loans advanced in Q1 were 39% up year-on-year at 58,437.
Colleen Babcock, Rightmove’s property expert, said: “Supply and demand is slowly rebalancing towards more normal levels, though we still have a way to go before we reach pre-2020 levels of available homes for tenants. The good news is that the latest industry snapshot suggests more investors are taking out buy-to-let loans compared with last year, which should help to bring even more homes to the rental market.”
Alex Caddy, manager at Clarkes Estate and Letting Agency, said: “The rental market has undergone a marked shift in 2025. After several years of sharp rent inflation post-pandemic, tenants hit a ceiling by late 2024, leading to widespread price slowdowns.
“Competitively priced, well-presented properties continue to attract strong interest, echoing trends seen in the sales market. However, the market is now dealing with a much higher supply of rental homes, a complex reversal of previous trends. Some landlords have exited the sector over the past two years due to rising regulatory and financial pressures, but with the sales market slowing in some areas, a growing number of those properties have re-entered the rental market.”
