Understanding the latest data is crucial for landlords and investors. Recent reports paint a mixed picture: UK rental growth has slowed significantly. As of summer 2025, rents on new lets rose only 2.4% year-over-year[16] – the weakest pace in four years. Demand is cooling: tenant enquiries are about 24% lower than a year ago[28] as mortgage accessibility improves (letting more first-time buyers on the market) and migration levels stabilize.
Meanwhile, rental supply is increasing – the number of homes available to rent is nearly 20% higher than a year ago[29]. More supply and fewer tenants have pushed listing times up (average 16 days to let now vs 12 days in 2023)[30], and rents in some cities (e.g. Leeds, Bristol) have dipped slightly under the new market balance. Overall, rents are expected to grow modestly (~2–3% annually) as conditions normalize[31].
Yields and Returns: Despite slower inflation, long-term landlords are still benefiting. Since 2020, house prices in the rental sector have outpaced rents (36% vs 20% increase[18]), which has boosted capital gains. Zoopla reports an average gross UK rental yield of ~6%, with hot spots like the North East and Scotland above 7.5%[18]. Even London, with yields closer to 5-6%, remains investable if financed carefully. Importantly, BTL mortgage lending has picked up – new buy-to-let loans were up 60% year-on-year in early 2025[20] – suggesting improving investor sentiment.
Regional Differences: The rental picture varies by region. In London, rental supply is only slightly higher (+6%), but landlords face huge costs (avg. £187k deposit vs £29k in the North East[32]). Rents in the capital are rising slower (~2%), and many London landlords are selling up. By contrast, Northern cities with lower prices and strong demand are seeing more stable or growing rents. Investors should target areas where yields are high and demand remains strong, while being cautious in over-supplied or extremely expensive markets.
Tenant Profile and Market Factors: With mortgage access easing (a 2025 rule change boosted first-time borrowing by ~20%[33]), more young people are buying their first home, reducing rental demand. Immigration has also fallen, easing pressure. For landlords, this means securing reliable tenants (perhaps longer leases) is key. Maintaining homes (especially improving energy efficiency) can shorten vacancy periods. Landlords now face a gentler rental market – having more properties available to rent means competition for tenants, so offering quality and stability (good maintenance, responsiveness) will help let properties more consistently.
In summary, 2025’s data show UK rental markets moving into a more balanced phase. For landlords and investors, profitability now depends on careful market selection and cost control. With gross yields generally around 6-7%[18], a well-chosen property in the right region can still deliver solid returns. However, slower rent growth and higher supply mean that maximizing net yield (after expenses) is more important than ever. A data-driven strategy – the kind propertywithken employs – will help you align your investments with these trends. By using up-to-date market insights, you can set realistic rents, manage your portfolio effectively, and ultimately achieve sustainable long-term returns.