Average private rents in Great Britain fell in July for the first time since August 2020, according to industry data, signalling a tentative easing in a market that has pushed household budgets hard in recent years. Estate agent Hamptons reported that the average rent on a newly let property was down 0.2% year‑on‑year in July, a shift from the sustained, above‑inflation increases seen over the past five years and backed by transaction-level data gathered by Connells.

The headline national fall masks substantial regional divergence. Greater London recorded the steepest annual decline — around 3% in July and the seventh consecutive month of falls — while Wales, north‑east England and Yorkshire and the Humber also saw annual reductions. By contrast rents were still rising in seven of the 11 English regions, with the East Midlands, West Midlands and the south‑west among the strongest. Official and industry indices show the pattern of cooling is uneven across the country.

Several converging factors explain the lull. After a sequence of interest‑rate cuts over the past year, mortgage costs for some buy‑to‑let landlords have eased, reducing the immediate pressure to pass on higher borrowing costs to tenants. Lower mortgage rates have also encouraged some renters to explore home purchase, taking a little demand out of the rental market, Hamptons’ analysis said.

Supply-side dynamics have contributed to the change in momentum. Rightmove’s rental tracker shows the number of available properties to rent is materially higher than a year ago — roughly 15% up on the same period last year — with longer times to let and an increasing share of listings being reduced in price. Connells’ market reports, which draw on tens of thousands of transactions, provide similar evidence of improving availability in parts of the country.

Yet the picture for existing tenants is starker. Hamptons highlighted that rents on renewed tenancies continued to rise in July, up by roughly 4.5% year‑on‑year, so many sitting tenants remain exposed to significant cost increases when their contracts are renewed.

Even with the small annual fall in newly let rents, the level of rents remains far above pre‑pandemic norms. Industry figures put the average monthly rent for a new let at around £1,370–£1,375; by one widely quoted measure this is about 34% higher than in August 2020. Official statistics published by the Office for National Statistics show a slightly different but consistent picture of slowing rent inflation and notable regional differences.

Affordability pressures persist beyond headline rent movements. Barclays’ property analysis finds that housing typically absorbs close to a third of renters’ take‑home pay — about 30.8% — compared with just over a quarter for homeowners with mortgages. Barclays’ data and consumer surveys also show falling saving rates for deposit funds and growing numbers of would‑be buyers saying they cannot afford to purchase where they live, underscoring how rent inflation continues to constrain routes into home ownership.

Hamptons’ research also flagged structural change in the investor base: around one in five buy‑to‑let companies set up in Britain this year were owned by non‑UK national shareholders, a rise from earlier in the decade. The firm noted a shifting mix of investor origins and said Brexit had altered the share of EU‑based involvement since 2016.

There is some divergence between private industry indices and official statistics, and analysts caution that short‑term month‑on‑month shifts can reverse. The ONS publishes the Price Index of Private Rents and other official measures that are used to benchmark the market; its latest bulletins show slowing annual increases but underline how regional patterns and methodology differences can produce varying headline rates.

“After five years of relentless rent rises, the market has paused for breath,” said Aneisha Beveridge, head of research at Hamptons, in commentary accompanying the firm’s lettings index. Nonetheless, she and other analysts stressed that the pause is fragile: renewal rents are still climbing, supply improvements are patchy, and wider affordability challenges mean many households will continue to feel squeezed despite the recent easing. Hamptons has downgraded its rental‑growth expectations for 2025 accordingly, while urging caution about reading a single month’s data as a clear turning point.

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Source: Noah Wire Services