Private rents in Great Britain have declined for the first time since 2020, according to new data, signalling a cooling in the rental sector after years of rapid increases outpacing inflation. The fall, recorded in July, comes as easing mortgage rates reduce pressure on landlords to pass higher costs on to tenants.
Mortgage relief eases landlord costs
Industry figures show that average monthly private rents dropped by 0.4% compared with June. The shift follows a steady fall in mortgage rates over recent months, which has lessened financial strain on buy-to-let property owners. Analysts say that landlords facing reduced borrowing costs have been more willing, or in some cases forced by competition, to moderate rental prices.
A sharp contrast to recent years
The decline marks a reversal from a five-year stretch of almost uninterrupted rent growth, during which rates surged well above inflation. Between 2021 and 2024, annual increases regularly exceeded 6%, driven by a combination of tight supply, rising interest rates, and heightened demand for rental properties. The trend had sparked warnings from housing charities about affordability crises in major urban centres.
Regional variations in the slowdown
The cooling trend is not evenly distributed. London saw the largest month-on-month drop at 0.7%, reflecting an influx of newly available properties as more homeowners returned to the market. Meanwhile, rental prices in parts of northern England and Scotland remained stable, with some rural areas still recording modest increases due to persistent supply constraints.
Tenant relief tempered by ongoing challenges
Although the fall in rents offers some relief to tenants, campaigners caution that affordability remains a significant issue. Many renters are still paying substantially more than they were before the pandemic, and vacancy rates in certain regions remain low. The average monthly rent in Great Britain is still about 20% higher than in 2019, underscoring the scale of recent increases.
Outlook for the rental market
Economists expect rents to remain subdued through the remainder of 2025 if mortgage rates continue to edge lower and housing supply improves. However, they warn that any renewed upward movement in interest rates or a slowdown in housing construction could reignite price pressures. For tenants, the first fall in five years offers a glimmer of hope, but housing affordability remains far from resolved.
REFH – Newshub, 11 August 2025
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