In a historic shift for the UK housing market, the cost of renting a home has fallen for the first time on record. New data reveals a nationwide decline in rents for newly-agreed tenancies during 2025, marking a significant break from over a decade of continuous growth.
The Numbers Behind the Rental Market Shift
According to the estate agency Hamptons, which has been tracking this data since 2011, the average rent on a new tenancy agreement across the UK fell by 0.7 per cent over the course of 2025. This is the first annual decline the firm has ever recorded.
The trend was spearheaded by the capital, where the rental market has been under immense pressure for years. London saw a much more pronounced decrease, with rents dropping by 2.7 per cent. This London-led downturn subsequently spread to other regions, including the South East and the East Midlands, by the final month of the year, December 2025.
What's Driving the Decline in Rents?
Analysts at Hamptons point out that this stagnation in rental prices is not primarily a story of improved affordability for tenants. Instead, it is being driven by two key economic factors.
Firstly, a surge in first-time buyers has reduced demand in the rental sector. Nationally, first-time purchasers made up one-third of all home sales in 2025. In London, this figure was even higher, reaching up to 50 per cent. This movement out of the rental market was facilitated by lower interest rates, which made securing a mortgage more accessible for many young people.
Secondly, a broader context of economic weakness has played a role. This has led to a notable behavioural change, with more young adults opting to stay in the family home for longer, further easing the intense competition for rental properties that has characterised the market in recent years.
Forecast and Future Risks for Tenants
Despite this unprecedented annual fall, the outlook for renters remains mixed. Hamptons forecasts that the rental market will return to growth in 2026.
A significant factor that could push rents higher is the impending Renters’ Rights Act. Property experts warn that the new legislation, designed to offer greater protection to tenants, may have the unintended consequence of prompting landlords to increase advertised rents. This could be a strategy to offset perceived additional costs or risks associated with the strengthened regulatory environment.
While the 2025 data offers a temporary respite, the long-term challenges of the UK's housing market, particularly in high-demand areas like London, are far from over. The interplay between homeownership trends, economic policy, and rental regulation will continue to shape the cost of living for millions.
