UK rental growth slows but still outpaces inflation

UK rental growth slows but still outpaces inflation

Rents across the UK have risen by nearly 5% over the past year, continuing to exceed consumer inflation despite a slowdown in growth. Regional variations highlight shifting demand and supply pressures in the private rented sector.

Goodlord’s latest rental index reveals that average UK rents increased by 4.9% year-on-year, from £1,507 in September 2025 to £1,581 in September 2026. This translates to an additional £888 annual cost for tenants compared to the previous year. The data shows a continuing trend of rental growth outstripping inflation, although the pace of increase is moderating in some regions.

Wales experienced the highest annual rental growth, with rents rising over 7%, while England saw a 5.5% increase. Scotland recorded the smallest rise, just under 3%. The North East of England stands out with a striking 14% surge in average rents, jumping from £878 to £1,000 per property annually. Conversely, the East of England was the only region to report a slight year-on-year decrease of 0.4%.

Regional rental trends and demand shifts

The rental market is showing signs of cooling in certain areas. The East Midlands, for example, has experienced diminishing year-on-year growth for two consecutive years, indicating a notable shift in housing demand. Month-on-month rental increases were modest across the UK at 0.9%, with all regions except Yorkshire and the Humber seeing rises. The North East again led monthly growth with a 5.6% increase, followed by the North West at 3%.

Vacancy periods, or voids, averaged 20 days in September, a slight improvement from 21 days in August. The North East recorded the shortest void periods at 11 days, suggesting strong demand and rapid tenant turnover. Yorkshire and the Humber had the longest voids, averaging 29 days, which may reflect weaker demand or supply imbalances in that region.

Goodlord attributes the continued rental growth exceeding inflation to ongoing supply and demand pressures. However, the pace of rent increases appears to be slowing, influenced by factors such as a sharp decline in net migration that is easing some of the previous market imbalances.

Implications for landlords and letting agents

For landlords, the sustained rental growth above inflation offers some relief after years of regulatory changes and cost pressures. However, the regional disparities mean portfolio performance will vary significantly depending on location. Landlords in high-growth areas like the North East may see improved rental income and lower void periods, while those in regions with stagnant or falling rents may face challenges in maintaining yields.

Letting agents should note the cooling demand signals in the East Midlands and East of England, which could require more active marketing or rent adjustments to attract tenants. The slight reduction in void periods is a positive sign but maintaining low vacancy rates will require ongoing attention to property standards, tenant engagement, and compliance with evolving regulations such as the Renters’ Rights Act.

As rental growth slows but remains above inflation, landlords and agents must balance rent-setting strategies carefully. Overpricing in weaker markets risks longer voids, while underpricing in strong markets may leave income on the table. Monitoring local market data and tenant demand trends will be crucial for effective portfolio management.

What remains uncertain in the rental market outlook

While the data points to a slowing in rental growth, the underlying causes and future trajectory remain uncertain. The impact of migration trends, economic conditions, and potential government policy changes could alter supply and demand dynamics further. The Renters’ Rights Act and other regulatory reforms continue to influence landlord and tenant behaviour, with potential effects on rent levels and tenancy durations yet to fully materialise.

Landlords and letting agents should remain alert to these evolving factors and maintain flexibility in their management approaches. The balance between regulatory compliance, tenant satisfaction, and financial performance will be increasingly complex as market conditions shift.

Considerations for landlords amid rental growth changes

• Review local market rental data regularly to adjust rent levels appropriately and avoid extended voids.
• Ensure properties meet current safety and quality standards to attract and retain tenants in competitive areas.
• Stay informed about regulatory changes, including the Renters’ Rights Act, to manage tenancies effectively and avoid compliance risks.
• Assess portfolio performance regionally to identify areas requiring strategic intervention or potential divestment.
• Engage with tenants proactively to understand their needs and maintain good landlord-tenant relationships.

Supporting landlords with compliance and portfolio management

The Landlord Association (TLA) offers resources and support to help landlords and letting agents manage the challenges of a changing rental market. TLA membership provides access to up-to-date compliance information, practical guidance on tenancy management, and tools to organise property records effectively.

One such resource is ORBIT, TLA’s new property management and compliance platform currently in BETA testing. ORBIT is designed to assist landlords and agents in maintaining rental documentation, recording key actions such as repairs and inspections, and accessing compliance materials relevant to tenancy law and safety obligations. While still in development, ORBIT aims to streamline property management workflows and help members stay ahead of regulatory requirements.

Exploring TLA membership and ORBIT BETA access can support landlords in adapting to regional rental market shifts and evolving legal obligations, ensuring portfolios remain compliant and well-managed.

Looking ahead, landlords should monitor economic indicators and government announcements closely, as these will influence rental demand and regulatory frameworks. Strategic planning and active management will be essential to navigate the ongoing changes in the UK private rented sector.

Sources: Letting Agent Today