London has recorded the greatest slowdown in rental inflation, with average rents rising by just 1.3% over the last year, down from 8.7% a year ago, according to Zoopla. The average monthly rent in London now stands at £2,188, with inner London areas like Kensington & Chelsea seeing rental inflation of less than 1%. London remains home to the highest rents in the UK, with an average monthly rent of £2,190.
Zoopla notes that while rental market conditions are improving, the supply/demand imbalance is expected to persist through 2025. In areas with already high rents, affordability will limit rental inflation. However, rents in more affordable areas are likely to rise faster than earnings in 2025.
Across the UK, average rents are predicted to increase by 4% in 2025. Large cities, including London, are expected to see slower growth, while more affordable areas will experience higher rental increases. Demand for privately rented homes will continue to be driven by several factors, including the unaffordability of homeownership for first-time buyers, migration for work and study, and slow growth in the social rented sector. Although the pandemic-driven rental demand boom of 2022 is now behind us, tighter visa rules are helping reduce migration pressures.
