After several years of rapid increases, UK rental growth is beginning to moderate. According to data from Total Landlord Insurance, rents are expected to rise by around 4% in 2025, compared with sharper rises seen in 2024. While this suggests a gradual cooling of the market, the overall level of rent remains historically high, and demand for rental housing continues to exceed supply across much of the country.
The slight slowdown in growth is being influenced by wider economic factors such as easing inflation, stabilising wage growth and a modest recovery in the housing market. However, the balance between tenants and landlords remains delicate. Many landlords continue to face rising costs linked to higher mortgage interest rates, increased regulation and ongoing tax changes. These pressures are affecting profitability and, in some cases, discouraging investment in the private rented sector.
Landlords who entered the market when borrowing costs were low are now adapting to a new financial reality. The increased cost of mortgage repayments, coupled with tightening energy efficiency and safety regulations, has made property management more expensive. Some landlords have chosen to exit the market entirely, reducing rental supply and placing further upward pressure on prices.
For tenants, affordability remains a serious concern. Although rent rises may be slowing, the average cost of renting in the UK is still at record levels, particularly in London and other major cities. Limited housing availability means competition for rental properties remains strong, leading to continued strain on household budgets.
The government’s recent introduction of the Renters’ Rights Act 2025, which abolishes no-fault evictions and introduces new standards for the sector, may also influence how landlords approach the market. While the Act is designed to protect tenants and stabilise rental relationships, compliance requirements may increase costs for landlords in the short term.
At Penerley, we are advising both landlords and tenants on how to navigate this evolving landscape. Whether you are reviewing tenancy agreements, managing rising costs or planning to invest in rental property, our experienced property team can help you understand your rights and obligations under current law.
For expert legal guidance on landlord and tenant matters in 2025, contact Penerley Solicitors for practical, up-to-date advice tailored to your circumstances.
