In brief: The UK’s rental market has begun to cool after two years of double‑digit growth. Average rents reached £1,332 per month in March 2025, up 7.7% year‑on‑year, but the pace of increase has slowed.

This moderation matters for investors considering long‑term yields in London and other UK cities. The Price Index of Private Rents (PIPR) compiled by the Office for National Statistics (ONS) shows that UK private rents increased by 7.7 % in the year to March 2025, compared with 8.1 % in February.

Average monthly rents now stand at £1,386 in England, £792 in Wales, £1,001 in Scotland and £838 in Northern Ireland. Though still high, this slowdown signals a stabilising market after pandemic‑driven surges.

Rent growth has cooled because supply is finally improving while tenant demand eases. Property portals report 18 % more homes available to rent and a 7–17% drop in tenant demand compared with a year earlier.

This period of slower rental growth may offer GCC and Middle Eastern buyers a chance to enter the UK market, particularly London, before rents accelerate again, and while competition from tenants is temporarily easing.

To explore investment-ready new‑build properties across London and receive tailored advice, get in touch with Entralon’s team of non‑commissioned advisors here.

How do different UK cities compare on rent levels and renter satisfaction?

London remains the most expensive UK rental market: the average asking rent reached £2,698 per month in early 2025, a record high that is just £3 higher than the previous quarter. Manchester leads the rankings for tenant satisfaction and share of households renting, while smaller cities like Burnley and Grimsby offer significantly cheaper rents for those seeking affordability.

London’s rents continue to edge up, but growth has almost flatlined. Rightmove data show that advertised rents in the capital rose by just £3 quarter‑on‑quarter to £2,698, marking a fourteenth consecutive record. Yet the rate of increase is only 0.1 %, suggesting price ceilings are near. Outside London, rents average £1,349 and have grown by 0.6 % since the previous quarter.

Manchester is the UK’s top city for renters in 2025: 62 % of its households rent and 73 % of tenants are satisfied with their accommodation. The city’s large student population (nearly 89,000 students) and strong transport network underpin demand. For investors, high occupancy and satisfied tenants translate to stable yields.

At the opposite end of the spectrum, Burnley and Grimsby offer average rents around £620 and £655 per month, less than half the UK average. These towns are increasingly attractive to remote workers and families seeking lower living costs, though rental demand and capital appreciation are lower than in major metros.

Quick comparison table

What factors are driving or restraining UK rental growth?

Rental inflation is moderating because more homes are entering the market while fewer households seek to rent. Supply has increased 11–18% year‑on‑year as landlords list more properties, while demand is 7–17% lower due to affordability pressures and more first‑time buyers moving from renting to owning.

The easing of supply constraints stems partly from an uptick in buy‑to‑let lending; new buy‑to‑let mortgages were 32% higher at the start of 2025 than a year earlier. The government’s housing initiatives are also starting to release new homes, although output remains well below national targets.

Demand is softening because rent increases have outpaced wage growth. Average UK rents have risen 40% since 2020, while average earnings have grown 31 %. Some tenants are choosing to stay in existing leases, downsize or move into shared accommodation to manage costs.

Landlord behaviour is another key factor. Higher mortgage rates, tighter regulation and tax changes are causing some landlords to sell. Zoopla’s analysis shows that landlords account for only 10 % of home purchases, the lowest share in 17 years. The prospect of additional reforms, such as energy efficiency upgrades, may further deter investment.

Why is affordability becoming a crisis for renters?

Rents now consume a large share of household income. In London, rent‑to‑income ratios exceed 40 % for many tenants, well above recommended affordability thresholds. Annual rents average £15,400, up roughly £3,000 in three years. These factors contribute to “rental stress” among younger households and single parents.

Despite slowing rent growth, the cumulative rise over recent years has stretched budgets. Research shows that renters are now paying a higher proportion of their income on housing than any other tenure group. With living costs rising across utilities and food, disposable income is under pressure.

Affordability issues disproportionately affect people in major cities, where wages are higher but rents are disproportionately higher still. In contrast, some regional cities like Burnley and Grimsby offer lower rents but may lack the employment opportunities or lifestyle factors sought by international investors.

For GCC and Middle East investors, understanding these affordability dynamics is essential. High rents in London can translate into attractive yields, but only if tenants can continue to afford them.

Monitoring wage growth, immigration trends and government support measures will help investors assess sustainable demand.

What does the future hold for UK rents through 2030?

Analysts expect rent growth to slow to 3–4% annually in the near term, but structural shortages mean that rents are likely to rise again later in the decade. Property consultant Savills forecasts that UK rents will increase around 18 % between 2025 and 2030, although growth in London may be more modest at around 2.5% in 2025.

In the short term, the cooling of demand and the boost in supply should keep rent increases moderate. Cities with large university populations and technology hubs (e.g., Manchester, Leeds and Bristol) are expected to see stronger rent rises because of continued job creation and limited housing supply.

Looking towards 2030, persistent under‑building, population growth and potential landlord exits could drive another period of higher growth. Savills notes that rents could accelerate again if affordability stabilises and mortgage rates fall.

Investors should plan for both moderate near‑term gains and the possibility of renewed inflation later in the decade.

How will upcoming UK housing policies affect landlords and tenants?

The Renters’ Rights Bill, expected to take effect in early 2026, will end “no‑fault” evictions and convert fixed‑term assured shorthold tenancies into periodic tenancies. It will limit rent increases to once per year and expand legitimate grounds for possession. At the same time, earlier proposals to require all rental properties to achieve a minimum Energy Performance Certificate (EPC) rating of C by 2025 for new tenancies have been shelved, reducing pressure on landlords but leaving future energy‑efficiency mandates uncertain.

The abolition of Section 21 evictions will give tenants greater security but may lengthen the process for landlords to regain possession. The Bill also prohibits rental bidding wars and introduces a landlord ombudsman and private rented sector database to improve transparency. For investors, these reforms increase regulatory complexity. However, high‑quality new‑build and off‑plan properties in London typically meet higher standards and attract long‑term tenants, reducing turnover risks.

Energy regulations remain a moving target. A previous government planned to require EPC ratings of ‘C’ or above by 2025 for new tenancies and by 2028 for all rentals. Those plans have been scrapped, but the drive for greener housing is likely to return later in the decade. Savvy investors should budget for efficiency upgrades when assessing returns.

What does this mean for GCC and Middle East investors looking at London and Dubai?

London’s rental market offers high rents and relatively stable growth despite cooling demand. For GCC investors seeking international diversification, yields in prime London remain attractive compared with other world cities, while the UK’s transparent legal framework and currency stability add appeal. Dubai, by contrast, continues to see rapid population growth and tax‑free rental income, offering a complementary opportunity for investors.

The moderation of rent growth in London does not diminish its long‑term appeal. With limited land supply and a global financial centre economy, London has a structural shortage of high‑quality housing.

New‑build and off‑plan developments, especially those near transport hubs and universities, are likely to enjoy resilient demand from professionals, students and international tenants. Investors should consider units with strong energy ratings and amenities to future‑proof against regulation.

Meanwhile, Dubai’s property market offers higher yields and lower transaction costs. Off‑plan projects in areas like Business Bay and Dubai Creek Harbour provide modern amenities, flexible payment plans and residency benefits. Diversifying across both cities can balance risk and reward for international investors.

Entralon’s platform provides access to London and Dubai new‑build properties with daily‑updated listings. You can browse available developments in London or Dubai and compare specifications, prices and rental yields.

Our advisors specialise in serving GCC and Middle East buyers, offering independent, non‑commissioned guidance and transparent pricing.

Final Thoughts

The UK rental market in 2025 shows signs of stabilisation, with moderate growth replacing the double‑digit increases of recent years. London remains a premium market with record rents, while regional cities offer varying levels of affordability and tenant satisfaction.

Policy reforms will reshape landlord‑tenant relationships and could influence supply over the next few years.

If you are considering investing in a UK or Dubai property, Entralon offers a transparent, commission‑free platform with daily‑updated listings, expert advisors and comprehensive support for international buyers. Whether you’re exploring London’s resilient rental market or Dubai’s high‑growth opportunities, our team can help you make informed decisions. Learn more and start your investment journey today.

FAQ

What is the current average rent in the UK?
According to the Office for National Statistics, the average UK monthly rent was £1,332 in March 2025, representing a 7.7 % annual increase. This rate is lower than the double‑digit growth seen in previous years.

Is London still a good buy‑to‑let market?
Yes. London’s average rent reached £2,698 per month in early 2025. Growth has slowed, but demand from professionals, students and international tenants remains strong. Prime locations near transport, universities and employment hubs continue to offer stable yields.

Which UK cities are most affordable for renters?
Smaller cities such as Burnley (£620/month) and Grimsby (£655/month) provide some of the most affordable rents in Britain. However, rental demand and capital growth are lower than in larger metropolitan areas.

What is the forecast for UK rental growth?
Analysts expect 3–4 % annual rent growth in the short term, with Savills forecasting around 18 % cumulative growth by 2030. Supply shortages and population growth could drive higher growth later in the decade.

How can Entralon help me invest in London or Dubai?
Entralon is an international property platform that specialises in new‑build and off‑plan properties in London and Dubai. We offer a non‑commissioned model, transparent pricing, and daily‑updated listings. Our advisors assist GCC and Middle East buyers through every step of the process, from property selection to legal and financing guidance. Visit our contact page to start a conversation.