UK Rental Market Update Q2 2025: What's Really Happening?

National Overview: Rental Growth Slows, But Remains Elevated

As of Q2 2025, average asking rents outside of London have hit a new high, climbing above £1,360 per month. However, annual growth has slowed to just under 4% - the lowest it's been since 2020. This marks a significant shift from the double-digit increases seen in 2021 and 2022, when demand far outpaced supply across most of the UK.

Rather than indicating a downturn, this suggests the market is rebalancing. More stock is becoming available, landlords are returning to long-term lets, and tenants now have more room to weigh up options. All of this is nudging the market back toward more sustainable, predictable dynamics.

Rental Supply Rebounding Across the UK

Rental stock levels are up 15% year-on-year - a significant development that is helping to ease the bottleneck tenants experienced in recent years. That said, the market is still 29% below 2019's pre-pandemic levels, so competition has eased but not disappeared.

Increased supply is being driven by multiple factors: returning buy-to-let investors, sellers unable to offload homes in a cooling sales market, and short-term lets converting back into longer-term tenancies. Many of these are reappearing in regional cities and suburban markets where affordability is higher and yields remain strong.

Tenant Demand Still High, But More Measured

While demand remains strong, it is no longer surging. Nationally, the average number of enquiries per rental listing has dropped from 16 last year to 11 - a meaningful shift that gives tenants more breathing space. This reduction in pressure is helping to slow rent inflation and extend the time properties remain on the market.

Smaller homes - particularly well-presented one and two-bed flats - continue to attract consistent interest. In contrast, larger properties or those with outdated décor or energy inefficiencies are taking longer to let and may require price reductions to remain competitive.

Price Growth Hotspots in the North West

Although this blog focuses on the UK as a whole, certain North West areas have stood out in the Q2 data for sharp annual rent increases:

• Rochdale: Asking rents up 17% year-on-year
• Stockport: Up approximately 15%
• Birkenhead & Prenton (Wirral): Up around 10–11%

These increases reflect continued strong demand in specific Greater Manchester and Merseyside submarkets. However, they are not representative of the entire region. Other locations - including some coastal towns and rural areas - are seeing steadier pricing and longer time to let, in line with national trends.

Letting Times Increasing Across the UK

On average, it's now taking 25 days for rental listings to be marked as "let agreed" - up from 21 days last year. This shift mirrors the rise in supply and the more measured pace of tenant decision-making. Nearly 24% of properties are now undergoing price reductions during marketing, the highest level seen since 2017.

In practice, this means accurate pricing and professional presentation are becoming critical. Landlords who rely on outdated valuations or fail to meet evolving tenant expectations may experience longer voids and reduced yields.

Buy-to-Let Lending Signals Renewed Confidence

Investor sentiment is showing signs of recovery. Buy-to-let mortgage activity has increased by 17% over the same period last year, with new rental property purchases up 28%. While challenges such as interest rates and regulatory changes persist, this data suggests a cohort of professional and portfolio landlords is returning to the market with a more long-term mindset.

In regions with strong gross yields - including the North West and parts of Yorkshire - investors appear focused on value-led purchases and sustainability rather than short-term returns. Energy efficiency, tenant quality, and ongoing compliance are increasingly driving investment decisions.

Affordability and Renter Behaviour

Despite slower rental growth, tenants are still spending significantly more each month than they were five years ago. The average renter outside London is paying over £400 more per month compared to 2020, while earnings have risen at a slower rate. This affordability pressure is altering behaviour: more tenants are sharing, compromising on space, or relocating to more affordable areas.

Nationwide, tenants are also placing greater importance on EPC ratings, broadband quality, and landlord responsiveness - all factors that influence long-term satisfaction and willingness to stay.

Key Takeaways for the Months Ahead

For landlords, the message is clear: the market is still healthy, but price sensitivity is growing. Getting the marketing, presentation, and pricing right from the outset is essential. For tenants, there's more choice and a slightly less competitive playing field - but rent levels remain high, so careful budgeting and swift decision-making are still key.

Farrell Heyworth's Perspective

At Farrell Heyworth, we're closely monitoring the evolving dynamics of the UK rental market. While we don't speak for the entire country, our teams working across Lancashire and Cumbria - including in Preston, Lancaster, Morecambe, and Blackpool - are seeing encouraging signs of balance returning.

Well-priced, energy-efficient homes continue to attract interest, while landlords who embrace realistic expectations and professional standards are achieving quicker lets. It's a more thoughtful, data-led rental market now - not necessarily easier, but certainly more stable. Whether you're letting, renting, or simply planning your next move, our branches are here to provide grounded, regionally relevant advice.

Explore our lettings services or speak to your local branch to find out how current trends may affect you.