According to Rightmove, it is the second time in five years that quarterly rents have fallen.
The report noted that in Greater London, the average asking rent for all property types was £2,716 in Q4 2025, which is down 0.7% quarterly but up 0.8% year-on-year.
Looking at inner and outer London, average asking rents stood at £3,196 and £2,366 respectively. These have risen by 0.5% and 1.1% year-on-year.
Rightmove said the rental market in 2025 was settling into a “better balance” and “competition was less fierce than in recent years”.
In 2025, there were an average of 10 enquiries for every available rental home, which compares to the 2019 average of six and is lower than the 2024 average of 14.
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London had an average of seven enquiries per property last year, with the North West and Scotland having almost double the amount at 16.
The number of available rental homes was also 9% higher than the previous year, but a third lower than 10 years ago.
Looking at buy-to-let (BTL) mortgage pricing, the average two-year BTL mortgage rate for a landlord with a 25% deposit was 4.84%, which is compared with 5.51% in the previous year.
Rightmove said the average rent will rise by a further 2% in 2026, adding that the “supply and demand is improving”, but the “chronic shortage” of rental homes was placing pressure on rents.
Pricing accuracy ‘critical to maintaining momentum’
Colleen Babcock, Rightmove’s property expert, said: “There is still a long-term shortage of available rental homes, but it looks like landlords are taking advantage of cheaper available mortgage rates, and more available homes will benefit tenants.
“Existing tenants or those looking to rent their own home for the first time are likely to experience a much more settled and balanced market than a few years ago, when the competition to secure a home was frenetic. There is much greater availability of homes, and fewer tenants to compete with now, which should hopefully make the experience more positive for renters.”
Sarah Leslie, lettings manager at Jackson-Stops Sevenoaks, added: “Tenants are increasingly focused on value for money. Pricing accuracy is now critical to maintaining momentum. Homes that are realistically priced for current market conditions are continuing to let well, while those that are overpriced are taking longer to secure tenants.
“Despite this shift, supply constraints are still supporting rents. Overall rental supply remains well below long-term norms, which means rental growth is moderating rather than reversing.
“Tenant priorities are becoming clearer as working patterns continue to evolve. Demand is strongest for well-located homes that offer private outdoor space and good transport links, particularly as more employers encourage a return to office-based working.
“Rents are likely to continue rising at a measured pace, supported by limited supply and ongoing demand. In this environment, realistic pricing and professional management are key to achieving consistent, sustainable returns.”
Christina Harris, director at Cheffins, said: “Rental prices have been growing at pace, however the slowdown in growth last year was partly caused by uncertainty in the lead-up to the Budget and the release of the details of the Renters’ Rights Act. In general, most tenants were only moving if absolutely necessary, preferring to wait for clarity on both the Budget and new legislation.
“Rental growth had been exceptionally strong for some time, well ahead of inflation, so a period of moderation was inevitable. Towards the end of last year, we also saw an increase in supply, but as wages had not kept pace with rental values, affordability became a key issue for many tenants. With tenants typically needing to earn around three times the cost of rent, average rents in cities such as Cambridge were simply out of reach for some.”
She continued: “Supply remains far behind where it needs to be. The consistent shortage of good-quality, well-presented rental properties will no doubt put upward pressure on rents in the coming months. People still need to move for work or schools, and as the shortage of availability continues, it is likely that prices will edge up over the next year.
“While many landlords were cautious in the lead-up to the Renters’ Rights Act, in the main, rental properties continue to provide a good return on investment – better than what can be found in most savings accounts – and we haven’t yet seen the exodus from the market from landlords, which so many predicted.”
