UK rental market mortgage rates are helping push rents higher again, with Zoopla forecasting annual rent growth of 4% to 5% by year-end after supply fell for the first time in three years. For tenants in the UK, that means less room for relief even after a weaker pace of increases earlier this year.
3% fewer homes to rent than a year ago is the clearest sign of the squeeze. Zoopla said the number of available homes began dropping in May, reversed a supply recovery that had helped slow rent rises in 2024 and 2025, and left August supply 6% lower.
Richard Donnell on the supply shift
2.6% was the annual rise in rents in the 12 months to July, up from 1.6% in February, with the average rent now standing at £1,340 a month. Richard Donnell said higher mortgage rates are keeping more would-be first-time buyers in rented homes for longer, reducing available supply just as the seasonal upturn in demand gets into full swing.
4% to 5% is Zoopla's year-end forecast for UK rents, and Donnell tied it to weak landlord investment and higher borrowing costs. He said, “Higher mortgage rates are not just impacting the sales market, they are keeping more would-be first-time buyers in rented homes for longer, reducing available supply just as the seasonal upturn in demand gets into full swing.”
Yorkshire and Humberside pressure
12% was the fall in homes to rent in Yorkshire and Humberside, where supply tightened far faster than the national average. London also saw supply 6% lower, while Wales was the outlier with the number of available homes rising 7% and rent growth slowing more sharply than elsewhere.
5.4% is the pace of rent growth in homes costing below £750 a month, faster than the national rate of 2.6%, which shows the pressure is strongest in cheaper markets. Rents in Dumfries rose 11.3% and rents in Carlisle increased 8.8%, even as Zoopla said demand in many of these areas is weaker than a year ago.
Allison Thompson on tenant demand
Allison Thompson said the latest figures reflect the strong level of tenant demand, but she pointed to the split between the sales and rental markets. “Higher mortgage costs mean that some tenants are renting for longer than perhaps planned, while a previous dip in landlord investment is limiting replacement stock,” she said.
That leaves renters facing a familiar market problem with a sharper edge: demand may be softer in some places, yet falling availability is still pushing prices up. Zoopla said growing the number of homes for rent through increased investment is the most sustainable route to boosting choice and stabilising rent levels over the long run.
