According to the Office for National Statistics (ONS), this was lower than the 4% rate in the 12 months to December and the lowest annual growth since March 2022.
Lower growth across most nations
In England, the average monthly private rent was £1,423 in January, 3.5% or £48 more than the year before. This was also the lowest annual growth since March 2022, and softer than the 3.9% yearly increase seen in December.
Average rents rose by 5.8% of £45 in Wales to £826 per month. Unlike the other nations, this rate of growth was higher than the 5.7% seen in the year to December.
The rate of growth in Scotland slowed from 2.8% to 2.6%, bringing the average monthly private rent to £1,021 in the country. This was the lowest annual rise for more than four years, and Scotland has seen the rate of growth subside since August 2023, when this reached a record high of 11.7%.
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The ONS collects data for advertised new lets in Northern Ireland, finding that the average monthly rent was 5.6% or £46 higher than the year before in November at £875.
In Northern Ireland, this rate of rental price growth has been slowing since April 2024, and the increase in November was lower than the 5.7% rise recorded in October.
Rising rents in the North East
The North East continued to have the highest yearly rental growth across all English regions, with an increase of 8% in the year to January to £767 per month. This was higher than the annual rise of 7.9% in December.
London saw the lowest increase in average rents, up just 1.1% to £2,253 per month. This was also muted compared to the 2.1% increase in the 12 months to December, and a continued moderation since its peak of 11.5% in November 2024.
A change in landlord behaviour
Tom Bill, head of UK residential research at Knight Frank, said: “Although rents are drifting lower from the highs of the pandemic, red tape and tax are still a concern for landlords. The introduction of the Renters’ Rights Act this May adds extra layers of uncertainty around the setting of rents, repossession rules and the ability to sell.
“In many areas of London, we are seeing rents pushed higher as landlords attempt to sell and supply is squeezed.”
Nathan Emerson, CEO of Propertymark, said the slowing in the annual growth of rents “may offer some relief for tenants” but could also be due to “localised shifts in demand or changes in supply dynamics”.
Emerson said: “However, month-on-month, rent levels continue on an upward trajectory; therefore, policymakers must focus on creating conditions that encourage investment and maintain adequate rental stock to ensure the sector remains stable and able to meet housing need over the long term.”
Alex Upton, managing director for specialist mortgages and bridging finance at Hampshire Trust Bank (HTB), said while rental growth had moderated, there was still a supply and demand imbalance, which could “translate quickly into renewed upward pressure on rents”.
She added: “Landlord behaviour is shifting. Expansion is no longer the default strategy. Many smaller investors are reassessing exposure where returns have been eroded by taxation and regulation, and some are choosing to exit selectively. At the same time, more professional landlords are consolidating and repositioning rather than retreating. There is a clear move towards assets that offer stronger income resilience, including houses in multiple occupation (HMOs), semi-commercial and mixed-use property. Incorporation remains a consistent trend, but it introduces complexity around structuring, tax planning and long-term funding.
“These adjustments are changing the shape of funding demand. Landlords are not simply refinancing at maturity. They are releasing capital selectively, restructuring ownership, consolidating borrowing and adapting portfolios to reflect tighter regulatory requirements. That requires assessment based on judgement and experience, particularly where portfolios span multiple assets or income models.”
“A sustainable rental sector depends on confidence and clarity. If policy, taxation and funding conditions continue to feel uncertain, investment decisions will remain cautious. Over time, that caution feeds directly into supply. Stability in the rental market depends on consistent signals and finance that supports long-term viability,” Upton said.
