Welcome back to another edition of the Stentons Property blog! July is traditionally a busy month in the rental market, and this year has been no exception. With the latest data showing July recorded the highest rental figures of 2025 so far, it’s the perfect time to dive into what’s been happening and why!

The rental market in July 2025 tells a story of both resilience and transition. According to the Office for National Statistics, the average private rent across the UK stood at £1,344 per month, which is 6.7% higher than a year ago. While that still represents significant growth, it also marks the sixth consecutive month of slowing rental inflation, suggesting that the feverish pace of rent hikes seen over the last two years is beginning to moderate.

Regional differences continue to shape the picture. England remains the most expensive, with average rents now £1,399 per month, while Wales experienced the fastest rise in the past year, climbing by 8.2% to reach an average of £804. Scotland saw slower growth at 4.4%, with typical rents at £999, while Northern Ireland, where data is available to April, recorded a 7.6% increase. Within England, the Northeaststood out as the region with the steepest annual inflation, rising by 9.7%, compared to Yorkshire and the Humber, where growth slowed to just 3.5%.

Despite these regional variations, the underlying theme is clear: supply shortages remain the key driver of rental pressures. RICS has reported the steepest fall in new rental instructions since the height of the pandemic, as many landlords continue to leave the sector. According to the NRLA, almost a third of landlords are considering selling their properties within the next year. This reduction in available stock, coupled with steady demand, has inevitably kept rents elevated.

The reasons behind landlord disengagement are complex but largely financial. Many are struggling with higher mortgage costs after years of interest rate rises, as well as the loss of full mortgage-interest tax relief. On top of that, looming regulatory changes—including tighter energy efficiency requirements and the long-awaited Renters’ Rights Bill—are adding to uncertainty. Some landlords have chosen to exit entirely, while others are increasing rents to cover rising costs and anticipated compliance bills.

At the same time, recent base rate cuts by the Bank of England have eased some pressure. With buy-to-let mortgage rates now hovering around 5%, landlords are finding their financing a little less punishing. More importantly, slightly softer borrowing conditions have opened the door for some tenants to move into homeownership, reducing demand for rentals in certain areas. This has led analysts, including Hamptons, to downgrade their rental growth forecasts for the remainder of 2025—from around 4.5% to closer to 1%.

Interestingly, the market is not moving in lockstep across the country. In London, where rents have been running hot for several years, July saw the first signs of reversal, with average private rents falling 0.9% compared to a year ago. That dip contributed to the first overall decline in private rents across Great Britain since 2020. By contrast, regional markets outside the capital remain robust, with momentum still strong in the North and Midlands, even if growth is starting to ease.

Looking ahead to the second half of 2025, the outlook is finely balanced. Supply is unlikely to improve significantly in the short term, with landlord surveys showing little appetite to bring new stock to the market. At the same time, affordability pressures on tenants may act as a natural brake on further rent increases. If mortgage rates continue to fall, more households may transition into ownership, which could take some of the heat out of rental demand. However, until there is a meaningful shift in supply, rental inflation is unlikely to disappear entirely.

In short, July’s figures capture a market at a turning point. Prices are still high, but growth is cooling. Landlord exits and regulatory changes remain the big stories to watch, while regional dynamics will continue to create winners and losers across the country. For now, the rental market remains challenging for tenants, complex for landlords, and highly sensitive to the policy and economic shifts expected later this year.

If you’re a landlord looking to rent or sell your property, or a tenant currently looking for a place to live, get in touch with us today!

Until next time, happy house hunting!