Britain’s rental sector is bracing for increased financial strain on tenants, as annual price growth is projected to accelerate sharply after a three-year period of moderation. According to data from Zoopla, average rents for new tenancies climbed 2.6% in July compared to the previous year, a figure that continues to trail overall inflation but signals a tightening market.
The property portal forecasts that rent increases could reach between 4% and 5% before the year concludes. This projection stems from a dual pressure: a scarcity of available properties and heightened competition from prospective buyers who have been deterred from the purchase market by elevated mortgage rates.
Richard Donnell, Zoopla’s executive director, emphasized the volatility of the current landscape. “Our latest report shows how sensitive the rental market is to even modest changes in how many homes are available for rent,” he noted. Donnell argued that expanding the rental supply through greater investment remains the most viable long-term strategy for stabilizing costs.
The outlook follows a brief period of relief in early 2026, when annual rent growth dipped to a low of 1.6% in February. However, the market has since reversed course. The inventory of homes available for rent has contracted by 3% compared to last year, and each listing now attracts an average of more than five inquiries, marking the most intense level of demand in nearly two years.
While the newly implemented Renters’ Rights Act in England, described as the sector’s most significant overhaul in over three decades, aimed to protect tenants, the fundamental issue of supply persists. Landlord investment remains subdued due to increased regulatory burdens and higher operational costs, according to Nathan Emerson, chief executive of Propertymark. “A sustainable private rented sector requires the right conditions for responsible landlords to invest for the long term,” Emerson stated, adding that increasing supply is critical to improving affordability and choice.
The impact of these rising costs varies geographically. London and other high-cost regions are experiencing particularly strong demand. However, Zoopla’s analysis suggests that affordability ceilings in these expensive areas may limit how much further rents can climb, whereas renters in more affordable regions retain greater capacity to absorb increases.
Five inquiries per listing is insane. The mortgage trap pushing people into renting is creating a perfect storm we haven’t seen in years.
Interesting that London might hit an affordability ceiling while other regions take the hit. Does anyone actually know which areas are next?
I sold my buy-to-let last year. Between the new regulations and tax changes, it just isn’t viable anymore. This isn’t going to get better.
4-5% on top of everything else? How are low-income workers supposed to survive this? It feels like the government has no plan at all.
Finally, someone admits supply is the real issue. The Renters’ Rights Act is nice, but without more homes, tenants will keep losing out.