Rents on newly let properties rose just 0.4% year-on-year across the UK in June,  the weakest growth since August 2020m with declines noted in London (-2.5%), Wales (-0.9%) and Scotland (-0.5%).

Tenant demand has softened, down 11% in the first half of 2025 compared to the same period in 2024, and 20% below 2019 levels. These numbers owe much to falling mortgage rates which have helped renters buy their own homes.

Hamptons suggests that despite the short-term cooling, structural supply shortages and upcoming regulatory changes, including the Renters’ Rights Bill and EPC requirements, are expected to keep upward pressure on rents in the medium term.

However, a weaker labour market outlook is expected to reduce growth by 0.5 percentage points each year.  This means Hamptons now expects rents to rise 3.5% in the year to December 2026 and 3.0% in 2027.

Commenting on the latest figures and projections Hamptons head of research Aneisha Beveridge said: “The rental market has softened more quickly than we anticipated towards the end of last year.  What initially appeared to be a London-centric slowdown has now spread across the country, with rents declining in multiple regions and growth easing elsewhere.”

She added that more affluent renters were becoming first-time buyers, while the economic slowdown was limiting what others could afford.

But Beveridge stressed that that this was not the end of the rental growth story.  “The structural shortage of rental homes remains unresolved, and upcoming regulatory changes, such as the Renters’ Rights Bill and new EPC requirements, are likely to constrain supply further and add to landlords’ costs.”

“A slowdown in build-to-rent development this year is also expected to result in fewer new rental homes entering the market in the coming years.  These pressures will continue to underpin rental growth over the medium term, even as the market recalibrates in the short term.”