Average rents climbed by 4% to £1,368 over the 12 months to December, the latest official figures show.

This annual growth rate was down from 4.4% over the year to November.

Wales and Northern Ireland saw the sharpest increase with average rents up by 5.7% in both locations, to £822 per month and £873 respectively.

In England rents were up by 3.9% to £1,424 and in Scotland they rose by 2.8% to £1,018.

Within England, the North East recorded the strongest rental inflation at 7.9%, while London’s figure was the lowest at 2.1%.

Separate figures from the ONS also revealed that average house prices edged higher over the year to November.

Hampshire Trust Bank managing director of specialist mortgages and bridging finance Alex Upton says: “While the latest ONS data shows a slowdown in rental growth, the underlying pressure has not gone away. “Demand remains strong, supply is still tight, and that imbalance continues to feed through into pricing.

“Landlords are facing a growing list of considerations. 

“The Renters’ Rights Act, combined with tax and cost pressures confirmed in the Budget, including changes to mortgage interest relief and dividend taxation, is prompting many to take a more strategic view of their portfolios. “Some are moving into limited company structures, others are rebalancing into semi-commercial or mixed-use assets, and many are reshaping how their funding aligns with long-term plans.”

He adds: “Brokers are playing a central role in this shift, helping landlords navigate complex changes, structure sustainable funding, and stay confident in a market that is becoming harder to predict.”