UK rent growth cools to 2.4% as the market resets
Average private rents in the UK rose 2.4% in the 12 months to January 2026, according to the ONS Price Index of Private Rents. That is the slowest annual rate since early 2022 and a sharp step down from the double-digit peaks of 2023 and 2024. The monthly figure was flat, with average rents at £1,368 across the UK. For agents and landlords, the headline number matters less than what sits underneath it: a market where demand remains strong but affordability has become the binding constraint.
The ONS data is now the primary reference for rent inflation, having replaced the old Valuation Office Agency sample. It draws on around 500,000 rental transactions a month and is published alongside the wider inflation basket. Lenders, valuers and portfolio investors now quote it in reports. If you are preparing a valuation or a rent review, it is the figure to cite.
Regional rental trends: where rents are still climbing
The national average hides wide regional variation. The North East recorded the strongest annual growth at 4.1%, followed by the South West at 3.6% and the North West at 3.2%. These are markets where rents remain below the national average and where tenant demand has outrun supply for several years. In the North East, average rents are around £700 a month, so a 4% rise adds roughly £28 to a typical tenancy. That is absorbable for most tenants and keeps arrears risk low.
London told a different story. Average rents in the capital rose just 1.1% over the year, the weakest of any English region. At an average of £2,200 a month, London rents are now more than 60% above the UK average, and affordability pressure has capped further growth. The South East and East of England also lagged, at 1.8% and 1.9% respectively. These are the markets where landlords are most likely to face void periods if they push rents too hard at renewal.
Hotspots for 2026
- North East: Sunderland, Middlesbrough and Newcastle continue to attract yield-focused investors. Gross yields of 6% to 7% are achievable on terraced stock.
- North West: Manchester and Liverpool remain the volume markets. Manchester city centre rents have grown faster than the regional average, though new-build supply is now catching up.
- South West: Bristol, Exeter and Plymouth benefit from constrained supply and strong in-migration. Yields are lower, typically 4% to 5%, but capital growth has been steadier.
- Scotland: Rent growth has been moderated by rent control legislation in the private rented sector. Average rents rose 2.9% in the year to January 2026, with Edinburgh and Glasgow still tight.
- Wales: Rents rose 3.4%, with Cardiff and Swansea leading. The Welsh Government's Renting Homes (Wales) Act has changed tenancy structures but not the underlying supply-demand imbalance.
Supply and demand: the balance is shifting
Rightmove's latest rental trends tracker shows the number of available rental properties per estate agency branch is up around 12% year on year, while tenant demand enquiries are down roughly 8%. That is the first sustained improvement in supply since 2021. It does not mean the market has flipped. Supply remains well below pre-pandemic levels, and demand is still historically high. But the direction of travel matters for how you price and market stock.
Two forces are adding supply. First, accidental landlords who bought during the low-rate era are now selling, and some of that stock is being bought by investors who intend to let it. Second, build-to-rent completions hit a record in 2025, with around 20,000 new units delivered across the UK. Much of that is concentrated in city centres, which is why Manchester and Leeds are seeing more competition at the top of the market.
On the demand side, tenant formation has slowed. Net migration is running below its 2023 peak, and the 20 to 34 age cohort that drives rental demand is growing more slowly. The Renters' Rights Act, which received Royal Assent in 2025, has also changed behaviour. Tenants are staying put longer, with average tenancy lengths now around 22 months, up from 18 months in 2022. That reduces turnover but also reduces the number of new lets available each month.
What this means for rental yields
Gross yields have compressed in the South and held up in the North. Using average prices and rents, the North East offers the best gross yield at around 6.5%, followed by the North West at 5.8% and Yorkshire and the Humber at 5.4%. London yields sit at around 3.4%, the lowest in the UK. The South West, despite strong rent growth, has yields of around 4.2% because capital values remain high.
Net yields tell a more nuanced story. Service charges, ground rents and compliance costs have risen sharply. EPC upgrades to meet the proposed minimum standard of EPC C for new tenancies, expected to be consulted on again in 2026, will cost an average of £6,000 to £8,000 per property for older stock. Landlords in low-yield markets are the most exposed to these costs. Agents advising on portfolio purchases should model net, not gross, returns.
Tenant demand: what tenants are asking for
Tenant priorities have shifted. Rightmove's data shows searches for properties with a home office or dedicated workspace are up 18% year on year. Energy efficiency is now a top-five consideration for 42% of tenants, up from 28% in 2023. Bills-included listings, once a niche, now account for around 8% of all rental listings in major cities.
Affordability is the dominant theme. The average rent-to-income ratio for new tenancies is now 32% in England, up from 27% in 2019. In London it is 41%. Tenants are increasingly opting for smaller properties, longer commutes or shared living arrangements. Agents who market on price alone will struggle. Those who market on total cost of occupation, including bills and commute, are converting enquiries faster.
Compliance and the Renters' Rights Act
The Renters' Rights Act abolished Section 21 no-fault evictions and introduced a national landlord register, a decent homes standard for the private rented sector, and a new ombudsman. For agents, the practical impact is on documentation. Every tenancy now requires a written statement of terms, a property condition report at move-in and move-out, and evidence of compliance with the decent homes standard. Disputes at deposit deduction stage have risen since the Act came into force, and tribunals are scrutinising inventory evidence more closely than ever.
That is where property inventory software earns its keep. A timestamped, photo-rich inventory with AI-generated condition notes is now the difference between a clean deposit deduction and a failed claim. Agents managing hundreds of tenancies cannot rely on paper checklists or generic templates.
What agents should do now
- Re-base valuations on ONS data, not asking rents. The ONS index reflects achieved rents, which is what lenders and tribunals accept.
- Segment your marketing by region. A single national message will not work when the North East is growing at 4.1% and London at 1.1%.
- Model net yields including EPC costs. Gross yield comparisons are misleading when compliance costs vary so widely by property age.
- Invest in inventory and condition reporting. The Renters' Rights Act has made evidence the centre of deposit disputes.
- Watch build-to-rent supply in city centres. New completions will pressure rents in Manchester, Leeds and Birmingham through 2026.
Outlook for the rest of 2026
Rent growth is likely to settle in the 2% to 3% range nationally, with the North and Midlands at the top of that band and London and the South East at the bottom. Supply will continue to improve slowly, but not enough to return the market to balance. Tenant demand will remain strong in absolute terms, even as it cools from the 2022 peak. The agents who thrive this year will be those who price accurately, document thoroughly and market on total cost of occupation rather than headline rent.
Book a demo
If you are managing tenancies across multiple regions, the compliance burden under the Renters' Rights Act is only going to grow. Our property inventory CRM generates AI-assisted condition reports, stores timestamped photo evidence and integrates with your tenancy management workflow. Book a demo to see how it handles a full move-in and move-out cycle in under 20 minutes.