UK rents decline for second month amid market cooling

The UK rental market experienced a modest decline in average rents for the second consecutive month in January 2026, according to the latest HomeLet Rental Index. The average rent across the UK eased to £1,302, down 1.1% from £1,317 in December 2025. Despite this dip, rents remain 2.4% higher than in January 2025, when the average was £1,271.

Outside Greater London, rents also fell slightly by 0.5%, from £1,124 to £1,118, but still stand 2.1% above the previous year’s figure of £1,095. This data suggests that while rental growth is slowing, the market is not undergoing a sharp correction.

Rent growth is slowing as new regulations loom

Mike Dawson, HomeLet’s head of sales, commented on the figures: “This month’s Rental Index figures suggest a rental market that’s easing rather than correcting.” He highlighted that the approaching Renters’ Rights Act is placing additional pressure on letting agents to demonstrate value to landlords during this period of change.

“Landlords are also looking for greater certainty around income in preparation for the new regulations,” Dawson added. This environment is likely to encourage landlords to adopt more rigorous tenant referencing processes to secure reliable tenants, as recommended by HomeLet.

London sees the sharpest rent softening

London continues to experience the most pronounced rent reductions, with average rents falling to £2,078 in January 2026. This represents a 2.4% decrease from the previous month and only a 2.6% increase compared to January 2025. Consequently, London now records the weakest annual rent growth of any UK region.

Despite the national trend of falling rents over two consecutive months, most UK regions are only seeing small monthly adjustments. This pattern indicates that rental demand remains broadly resilient, even as affordability pressures affect tenants.

Implications for landlords and letting agents

For landlords, the slowing rent growth and the upcoming Renters’ Rights Act mean that securing stable, reliable tenants will become increasingly important. The emphasis on advanced tenant referencing is likely to grow as landlords seek to mitigate risks associated with income uncertainty.

Letting agents will need to demonstrate clear value to landlords by navigating the changes effectively and supporting compliance with new regulations. The market cooling suggests a shift towards more cautious rent setting and tenant selection strategies.

Looking ahead

While rents remain above last year’s levels, the trend towards easing growth highlights a rental market in transition. Landlords and agents should prepare for the impact of the Renters’ Rights Act by reviewing their tenancy management practices and tenant screening procedures to maintain income stability.

Suggested internal link anchors

• UK rental market trends
• Renters’ Rights Act
• tenant referencing
• rental income stability
• London rental market
• affordability pressures
• letting agents’ role
• landlord income certainty
• rental growth slowdown
• tenant screening

TLA update

TLA is launching a new Trusted Partners Hub in Q1 2026, featuring verified and approved service providers selected to support landlords, tenants, and property management businesses. We are inviting legal, trades, insurance, financial, mortgage, tenant screening, and other service providers to register their interest here: https://landlordassociation.org.uk/become-a-tla-service-partner/