- Average advertised rents outside London reached £1,418 a month, while London rents hit £2,825.
- Rental demand and available homes outside London both fell by 2 per cent year-on-year.
- Higher mortgage costs could influence landlords' decisions to refinance or sell their rental properties.
Advertised rents across Britain have reached another record, with the average monthly asking price outside London rising above £1,400 for the first time. But the latest figures suggest the rental market is changing, as slower annual growth and softer demand outside the capital point to a more measured pace of increases.
Data from property portal Rightmove shows average advertised rents outside London reached £1,418 per calendar month in the third quarter, up 1.5 per cent from the previous quarter. Annual growth stood at 2.4 per cent, well below the exceptionally fast increases recorded during the rental market's post-pandemic peak.
London is moving differently. Average advertised rents in the capital reached £2,825 a month, with annual growth accelerating to 3.2 per cent. The number of available rental listings fell by 9 per cent year-on-year, newly listed homes dropped by 7 per cent and renter demand rose by 6 per cent.
Outside London, both the number of available rental homes and renter demand fell by 2 per cent compared with a year earlier. The figures suggest that, although supply remains tight, the intense competition that drove rents sharply higher a few years ago has eased.
Colleen Babcock, property expert at Rightmove, said advertised rents had passed £1,400 a month outside London for the first time, but added that growth had moderated compared with previous years.
"Supply remains constrained, which is continuing to put upward pressure on rents, but demand is also more measured," she said.
That distinction matters for tenants. A slower rate of increase does not mean rents are becoming cheaper. Instead, advertised prices are still rising, but at a more moderate pace.
London faces a tighter squeeze
The contrast between London and the rest of Britain highlights how local supply and demand are shaping rental costs. While rents have generally risen faster in lower-priced parts of Great Britain, London recorded the third-fastest annual rental growth in the latest figures.
The capital's falling supply and rising demand could leave tenants with fewer properties to choose from, even as affordability limits how much further rents can rise. Outside London, the more balanced movement in supply and demand suggests tenants may face less competition than during the market's most intense period, although record asking prices remain a challenge.
The figures also offer clues about the changing relationship between the rental and sales markets. Rightmove found that 13 per cent of homes listed for sale had previously been available to rent, up from 12 per cent a year earlier. Meanwhile, the proportion of rental homes that had previously been listed for sale fell from 17 per cent to 15 per cent.
These movements suggest that some rental properties are entering the sales market, while fewer homes coming up for rent have previously been offered for sale. However, the figures alone do not establish why individual landlords are making those decisions.
Higher borrowing costs complicate the outlook
For landlords, the next challenge may come when existing mortgage deals expire. Some owners who borrowed at much lower rates now face refinancing at higher costs, potentially reducing the income they retain from rental properties.
Matt Smith, mortgage expert at Rightmove, said moving from a cheaper fixed-rate deal to a higher mortgage rate could significantly affect monthly costs and rental yields.
With rent reviews generally limited to once a year, landlords must weigh the timing of refinancing against the income their properties generate. Where the figures no longer add up, some may consider selling rather than taking on a more expensive mortgage.
Kim Lidbury, president of the Association of Residential Letting Agents at Propertymark, said the latest figures showed why the rental market needed to be assessed on more than the pace of rent increases.
A slowdown in rental growth, she argued, would not by itself resolve affordability problems. The sector also needs enough good-quality homes at a range of prices, while landlords continue to weigh financing costs, taxation and regulatory requirements.
For tenants, the immediate picture remains difficult: advertised rents are at record levels, even as the market outside London becomes less competitive than it was during the post-pandemic surge. Whether that moderation eventually improves affordability will depend on how rents, household incomes and the supply of available homes develop in the coming months.
