For the first time since the Hamptons Lettings Index began in 2011, newly agreed rents ended a year lower than where they started.
Across Great Britain, new‑let rents dipped by 0.7% in 2025. It marks a subtle but significant turning point, closing a long period of consistent annual growth and signalling that the market is adjusting to softer demand.
By December, the average tenant moving into a new home was paying £1,371 per month, which is around £10 less than a year earlier for an equivalent property.
This easing was not confined to a single month or place. Instead, it gradually took hold across the country. London led the way early on, with declines beginning in January, but by the end of the year, five out of Great Britain’s 11 regions were recording year-on-year falls in newly agreed rents.
This compares with the end of 2024, when none of the regions were in negative territory. In some cases rents were still rising at a double digit rate.
London rents return to mid-2023 levels
London experienced the steepest correction. Newly agreed rents fell by 2.7% over 2025, which equates to £63 per month, taking values back to where they were in June 2023. Both Inner and Outer London contributed to the fall, with Inner London recording a 3.7% decline and Outer London seeing rents slip by 1.6%.
Beyond the capital, the adjustment varied but became increasingly widespread as the year progressed. By December, rents were also falling in the South East (-1.0%), the East Midlands (-0.2%), Yorkshire & Humber (-1.4%) and in Wales (-0.8%).
Elsewhere, the picture was flatter. Growth remained positive but subdued in the East of England, the South West and Scotland, each of which recorded growth below 1%. These regions may be on a trajectory that could see annual falls materialise in early 2026.
More homes on the market
Perhaps one of the most striking shifts in 2025 was the rebuilding of rental supply. Stock levels ended the year 6% higher than they were in December 2024. More notably, the number of homes available to rent now sits only 8% below 2019 levels.
This is a far cry from the post‑Covid period, when supply had fallen to 52% below 2019 levels and upward pressure on rents was at its most extreme.
However, the return of stock has less to do with rising landlord purchases and more to do with softer tenant demand.
As more first‑time buyers took advantage of improving mortgage affordability, and more young adults chose to stay at home longer rather than shoulder the cost of renting their own place, the competitive intensity of the rental market waned.
Landlord purchases drop to a new low
Despite the improvement in supply, buy-to-let investment has continued its long‑term decline. In 2025, investors bought just 10.9% of properties sold across Great Britain - the lowest share on record and the first time the figure has dipped below 11% over a full calendar year.
The reduction coincided with the first full year of the higher 5% stamp duty surcharge on additional property purchases, which replaced the previous 3% rate introduced back in early 2016.
Regionally, the picture remains uneven. The North East continues to stand apart as the most investor‑heavy part of the country, with landlords accounting for 29% of all purchases. The East Midlands and West Midlands followed at 15.1% and 15.0% respectively.
Yet 2025 also marked a subtle rebalancing. Falling interest rates boosted the appeal in Southern England, attracting more investors into markets where activity had previously slumped.
As a result, the South East, East of England and North East were the only English regions to record an increase in landlord purchases compared with 2024.
Renewal rents rise
While new‑let rents softened, renewal rents continued to edge higher. Across Great Britain, the average rent paid by an existing tenant renewing their agreement rose by 3.3% to £1,310 per month. This left a gap of just £61 per month between new let and renewal rents, the smallest differential since July 2021.
At the peak in October 2023, the gap stood at £170 per month, reflecting how sharply the relationship between the two series has since narrowed.
Renewal rents usually follow the direction of new‑let values with a c.18 month lag. As newly agreed rents have flattened or declined, renewal values have gradually converged towards them.
Most landlords have been keen to introduce more regular increases for their tenants, reflecting higher costs and taxes.
Looking ahead: How the Renters’ Rights Act may shape 2026
The next major turning point arrives in May, when the Renters’ Rights Act comes into force. By banning tenants from offering above the advertised asking rent, the new rules are likely to reshape the relationship between asking and achieved rents.
Landlords may respond by setting slightly higher asking prices, while achieved rents could initially rise more slowly as tenants test the higher guide figure.
The longer‑term implications are less certain. If some landlords find the new administrative framework burdensome, a minority may choose to scale back their portfolios, which would gradually reduce the number of homes available to rent.
But for most, the changes are unlikely to trigger a major shift in behaviour. The majority of longer‑term landlords are expected to stay the course, even as they adapt to a system that feels somewhat more complex.
What is more likely to chage is the approach to pricing. Rising costs, a higher sense of risk mean landlords will place greater emphasis on keeping rents tightly aligned with market values.
This firmer pricing discipline, combined with any slow erosion of supply, is likely to place renewed upward pressure on rents over time — particularly if investment levels remain subdued and stock starts to tighten again towards the end of 2026.
