Rents are rising at the slowest pace in four years as tenant demand cools and affordability pressures start to bite. It is another blow for landlords, who have seen their profits eroded by tax hikes and more stringent regulations in recent years.
Average UK rents increased by 2.8% in the 12 months to April, according to the latest rental market report from property listing site Zoopla. It brings the average monthly payment to £1,287.
The rate of rental growth is less than half the 6.4% recorded last year. It also lags behind inflation, which came in at 3.5% in April.
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“The slowdown is a result of weaker demand and ongoing affordability pressures, rather than an increase in rental supply,” said Richard Donnell, executive director of research at Zoopla.
Demand for rented homes is 16% lower than last year, but remains 60% above pre-pandemic levels.
Zoopla said lower levels of migration for work and study have contributed to the slowdown, having previously spiked in 2022/2023. Stability in mortgage rates and improved access to finance for first-time buyers have also played a role.
Rents may also be hitting an affordability ceiling, having soared after the pandemic when demand massively outstripped supply.
Higher property taxes
Investment properties used to offer attractive yields, but returns have been squeezed in recent years by higher taxes and more stringent regulation.
For example, landlords used to be able to deduct their mortgage interest payments from rental income when calculating their taxable income. This meant they enjoyed tax relief on this portion of the income, paid at their marginal rate.
Changes phased in between 2017 and 2020 replaced this system with a 20% tax credit – less generous for higher and additional-rate taxpayers.
Changes to stamp duty have also resulted in higher costs. Those purchasing a second home now face a 5% stamp duty surcharge following last year’s Autumn Budget, up from 3% previously.
The Renters’ Rights Bill, which is currently progressing through the House of Lords, will also introduce more stringent regulations, including banning no-fault evictions and restricting rent increases to once a year.
The aim is to protect tenants from unscrupulous landlords, but some argue that the new legislation will make it more difficult to get rid of tenants for legitimate reasons too.
Some landlords are selling up and quitting the sector as a result, resulting in a reduction in rental supply.
Is buy-to-let still worth it?
Although annual rental growth slowed to 2.8% in April, Zoopla expects it to pick up to 3-4% over 2025. Some areas are seeing faster growth than others. Belfast saw the biggest annual change in rents in April, up 11.5%. Rents in Leeds fell by 1.5%.
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Where are rents rising fastest?
City
Annual change in rents
Average rent (pcm)
Belfast
11.5%
£859
Newcastle
6%
£893
Cardiff
5.1%
£1,162
Liverpool
5%
£862
Cambridge
4.8%
£1,600
Southampton
3.3%
£1,174
Manchester
2.6%
£1,143
Glasgow
2.5%
£978
Edinburgh
2.4%
£1,322
Birmingham
2.1%
£993
Aberdeen
2%
£718
London
1.5%
£2,175
Sheffield
1.2%
£837
Nottingham
0.5%
£955
Bristol
0.4%
£1,395
Leeds
-1.5%
£985
Source: Zoopla Rental Market Report. Data as of April 2025 (published in June).
The yield you manage to extract will depend on the price of your property and the expenses you pay. Separate data from Rightmove found average rental yields in the UK were 6.3% in the first quarter of 2025, up 0.2% annually.
Rightmove data suggests landlords are generating the highest yields in the North East at 8.1%. Those in London are yielding the least, at 5.7%.
These yields look relatively attractive, despite recent pressures on landlords, but it is important to weigh up whether you will be able to match these average levels once all costs are taken into consideration.
This could include mortgage costs, maintenance costs, letting agent fees, landlord insurance and more. If you have void periods between tenants where no rent is coming in, you will be operating at a loss too.
If you are managing the property yourself, you will also need to decide whether the hassle is worth it. For context, some multi-year fixed-rate savings accounts are currently yielding around 4.5% with a lot less effort and risk.
Cash doesn’t offer the prospect of capital appreciation in the same way as a property, of course, which could go up in value if house prices rise.
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Katie has a background in investment writing and is interested in everything to do with personal finance, politics, and investing. She enjoys translating complex topics into easy-to-understand stories to help people make the most of their money.
Katie believes investing shouldn’t be complicated, and that demystifying it can help normal people improve their lives.
Before joining the MoneyWeek team, Katie worked as an investment writer at Invesco, a global asset management firm. She joined the company as a graduate in 2019. While there, she wrote about the global economy, bond markets, alternative investments and UK equities.
Katie loves writing and studied English at the University of Cambridge. Outside of work, she enjoys going to the theatre, reading novels, travelling and trying new restaurants with friends.
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