The average rent in Great Britain now stands at £1,366 per calendar month, however, the downward trend in mortgage rates is slowing the pace of rental growth. Landlords are benefiting from cheaper loan deals. This means that lower borrowing costs are benefiting tenants.

While some landlords remortgaging from cheap five-year fixed rate deals are still seeing their costs rise significantly, others rolling off two-year fixes may end up paying less.

In June, the average annual rent increase on a newly-let property in Great Britain was 0.4%, against 5.0% in the same month of 2024. An annual rise of 1.5% was last recorded in 2018, adding to the evidence that rent increases are returning to their long-term average, for the time being at least.

There are regional variations in performance. London, where rents average £2,288 pcm, is the only region where rents fell (-2.5%) annually; the average monthly cost is now the same as in May 2023. The Midlands (average £1,044) and the North (£957) topping the increase league, with rises of 3.3% and 1.8% respectively. But the latest data also underlines a new trend. The availability of cheaper mortgage deals is reducing tenant demand, as more first-time buyers are able to realise the dream of a home of their own. In June, the number of tenants registering to find a home was 8% lower year-on-year, and 19% down on 2019. Tenant registrations are falling in most areas - 61% of branches across our group in Great Britain reported an annual fall in June. This was the twelfth consecutive month in which demand was lower year-on-year.

Since the start of this year, there have been an average of 1.5 tenants seeking out a place to rent for each would-be first-time buyer. The ratio was closer to three-to-one in 2022 and 2023 when sharply-higher mortgage rates left first time buyers priced-out. Generally though, there has been a gradual decline since 2017, when the ratio of tenants to first-time buyers was 5.9 to one.

So marked has been the fall that in London and Scotland, for the first time in at least a decade, more people are now searching to buy a first home than looking for a place to rent. In the capital, first-time buyers account for 50.3% of new buyer registrations. This represents an annual rise of 2% in the number of first-time buyers looking to buy in June, against the backdrop of a decline in the numbers of other groups seeking to purchase.


For those who would like to climb onto the property ladder, the drop in mortgage rates has pushed the monthly cost of buying below the cost of renting. Anyone who has a deposit of at least 10% is now likely to be better off paying a mortgage than renting.

This shift has been most marked in more affluent locations. In such places, tenant demand has tumbled by 50% more than in the lowest income neighbourhoods.

" Looking ahead, it seems unlikely that rents will cool much further. "

As a consequence of the demand slowdown, there are 3% more homes available to rent than at the end of June 2024. The number of homes to let has been going up every month since August 2022, although the total is now growing by low single-digits. This reflects the lengthening time it takes to let a property, rather than new supply being added to the market. There remains a £99 pcm gap between the average rent on a newly-let property - £1,366 - and that on renewal of a contract - £1,267.


Nevertheless, rents on renewals have been getting more expensive each month since September 2023. Looking ahead, it seems unlikely that rents will cool much further. Landlords are attempting to gauge what the impact will be on their businesses of the Renters' Rights Bill.

The legislation seems set to dampen future buy-to-let investor appetite, meaning that the stock of rental homes will not be expanding.